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Full text of "Annual report"

5/S 



San Francisco Public Library 

GOVERK !:;;•. ..u^.m 

SAN FRANCISCO PUBLIC UBRARY 

REFERENCE BOOK 

Not to be taken from the Library 



3 1223 06010 8280 



Fipnt cover: New Gpntainer cr<yies are delivered to San Francisco. 




A Year 
of Achievement 



1986-87 was a year of getting things done . . . and getting new 
things started. 

■ After over 20 years ot talking and planning, the Fisherman's 
Wharf breakwater was completed. 

■ A new 36-acre Intermodal Container Transfer Facility was built 
adjacent to the container terminals expanding San Francisco's 
rail capabilities as the only Calilornia port with an on-dock ICTF 

■ To handle the now and future large-volume cargo vessels, the 
Port purchased two state-of-the-art container cranes and com- 
pleted plans to dredge deeper access channels to the container 
terminals. 

■ A new concept was adopted for the passenger terminal that 
would double berthing capacity and improve "sailing day" effi- 
ciency to keep San Francisco a first-class port-of-call. 

■ Vacancies in commercial property at the Port were reduced 
to a level well below the City average. 

■ Cargo tonnage moving through the Port of San Francisco 
increased 8%. 

■ The Port strengthened its efforts to preserve and promote San 
Francisco's ship repair industry, the largest blue collar employer 
in the City, through its support of homeporting Navy vessels. 

■ The Port initiated a Fisherman's Wharf design plan that will 
secure the future of the commercial fishing industry in San 
Francisco. 

■ Internal data processing capabilities were dramatically ex- 
panded and upgraded. This will increase operating efficiency 
and service to Port customers. 

■ Trade development was expanded to strengthen the ability of 
the Port to create cargo opportunities for the shipping lines. 



j 47611 SFPL: JR 
50 SFPL 04/12/02 



1 



The Port of San Francisco which oper- 
ates on a self-supporting basis and re- 
ceives no taxpayer assistance, this year 
earned a net inconne of $2,892,000 as rev- 
enue reached $29,457,000. Expenses also 
rose due to increased insurance and legal 
costs. 

San Francisco is a broad-based port 
providing the services required to encour- 
age growth in each of five distinct mar- 
kets — cargo handling, ship repair, com- 
mercial fishing, passenger services and 
commercial property The goal of the Port 
is to maintain and improve the competitive- 
ness of each of these markets for the eco- 
nomic benefit of the Port, the City and the 
citizens of San Francisco. In addition, the 
Port develops and maintains waterfront 
recreational areas for everyone to enjoy 

The centerpiece of the fourth largest 
market area in the country San Francisco 
is the financial center of Northern California 
and the hub of business activities involved 
in international trade. Against this rich 
background, the Port has created unique 
niches for its shipping lines and its mar- 
keting areas. 



MARITIME 

In fiscal year 1986-87 the Port of San 
Francisco increased its position among 
West Coast ports as an active and aggres- 
sive participant in international trade. Whiile 
the general cargo tonnage moving through 
Northern California ports increased 4%, 
San Francisco's tonnage increased 12%. 

Maritime operations accounted for 
$10,599,000 of the operating revenues this 
year. The addition of four new shipping 
lines and the growth of the Port's other 
shipping line tenants largely made up for 
the discontinuance of West Coast transpa- 
cific service by Lykes Line. Mexican Line 
(Transportacion Maritima Mexicana), op- 
erating a service between the Far East, 
West Coast and Mexico; South Seas 
Steamship Company serving South Pacific 
islands; Canadian Tropic Line in a service 
from British Columbia to Panama, and 
Compania Peruana de Vapores, serving 
Latin America, either moved to or estab- 



lished their operations at the Port of San 
Francisco. 

In November 1986, the Port dedicated its 
new36-acre Intermodal Container Transfer 
Facility (ICTF) adjacent to South Container 
Terminal, expanding the on-dock rail ca- 
pabilities It has offered since 1984. 

Transpacific continues to be the domi- 
nant trade route and is growing. This year 
the transpacific trade accounted for 67% 
of all general cargo and 75% of all con- 
tainer cargo handled by the Port of San 
Francisco. Tonnage in this route increased 
14%. Major factors contributing to this in- 
crease were the continued growth of Ev- 
ergreen Line and the addition of Japan 
Line at the end of the last fiscal year 

Tonnage in the Australia/New Zealand 
route went up with the increased frequency 
of Columbus Line's service. 

The largest percentage of growth was in 
the Southeast Asia trade route in which the 
total amount of general cargo increased 
68%. This was due primarily to a substan- 



tial increase in tonnage handled by Na- 
tional Shipping Company of the Philip- 
pines. 

The South/Central America trade route 
handles one of San Francisco's major im- 
ports — coffee. This year 92% of all Latin 
American coffee imported through the Bay 
Area was handled by the Port of San Fran- 
cisco. To further strengthen the Port's com- 
mitments in this area, the Port this year ap- 
pointed a representative for Latin America 
and established a new sister port relation- 
ship with the Port of Guayaquil, Ecuador 



Cargo Handling 

Total cargo tonnage increased 8% this 
year rising to 2,919,000 metric revenue 
tons. The most significant increases were 




4 , 



CONTAINER CARGO EXPORTS/IMPORTS 
Metric Revenue Tons (thousands) 



1400 



1300 



1200 



1100 



1000 



900 



800 



700 



600 



500 



400 



300 



200 



100 



i 




82 



83 



84 85 

Fiscal Years 



86 



87 



ICTF RAILCAR ACTIVITY 
(loaded cars) 



2343 




/ 



1986 1987 
Fiscal years 



in general cargo and container. General 
cargo rose 12% with container cargo 
showing a 21% increase. This container- 
ized cargo amounted to 104,000 TEUs. To- 
tal intermodal tonnage handled this year 
was 365,000, a 16% increase over 1985- 
86. 

Exports accounted for 51% of the total 
cargo and 56% of the containerized cargo. 
This IS an increase over last year when ex- 
ports were only 45% of total cargo and 50% 
of container cargo. Major exports were an- 
imal feed, cotton, scrap metal and waste 
paper; while leading imports were auto- 
mobiles, coffee, newsprint and fish/meat 
products. 

The only significant decline was in liquid 
bulk. This was due primarily to the de- 
crease in bunkering activity in San Fran- 
cisco and the drop in coconut oil imports 
during the restructuring of the Philippine- 
owned importing company 

Increased efforts were made this year to 



generate new cargo for the lines using the 
Port. For example, San Francisco's cargo 
base was expanded with the establish- 
ment of a waste paper compression facility 
on the Southern Waterfront. Waste paper is 
the highest volume export for all Bay area 
ports and will continue to grow 

Modernization of facilities continued this 
year with addition of new equipment and 
services to handle the larger vessels and 
to attract the high-value discretionary 
cargo Two new 40-long-ton. 100-fool- 
gauge container cranes, designed by Pa- 
ceco and fabricated by Hyundai Heavy In- 
dustries, arrived at North Container Termi- 
nal. These cranes, which have the height 
and reach to handle the larger ships, will 
be in operation by the first of 1988 

Traffic flow into and through South Con- 
tainer Terminal was improved with the con- 
struction of a new entry gate that increased 
the number of incoming and outgoing 
lanes and streamlined delivery and pick- 



up procedures North Container Terminal 
underwent gate improvements last year 

In support of San Franciscos shippers 
and shipping lines, a simple, easy-to-use 
corridor for overweight cargo was estab 
lished along Third Street Irom Pier 50 past 
North Container Terminal and into the In- 
termodal Container Transfer Facility and 
the South Container Terminal Many truck 
ing. Container Freight Stations and ware 
housing facilities have direct access to this 
designated corridor No special equipment 
IS required to use this corridor 

Plans were approved lor dredging two 
new 42-loot access channels to the Con- 
tainer Terminals, which will allow greater 
maneuverability m docking the larger con 
tainerships The proiect is now undC A i, 
and will be completed m November 198 r 
making San Francisco the only Northern 
California port with 42 feet ol water 



5 



Passenger Services 

Cruise activity out of San Francisco re- 
turned to normal in 1986-87 after 
reaching a peak in 1985-86 when cruise 
lines shifted vessels from the fear-de- 
pressed Mediterranean market to the pop- 
ular West Coast/Vancouver Expo market. A 
total of 73,000 passengers embarked or 
disembarked at San Francisco in fiscal 
year 1986-87 during 111 passenger vessel 
calls. This is down from 102,000 passen- 
gers and 133 vessel calls in 1985-86. A 
second factor contributing to the decline 
was the shift from San Francisco to Los An- 
geles as embarkation port for Holland 
American Line's Mexican cruises. 

San Francisco has always been a pop- 
ular port-of-call with cruise passengers 
and a regular destination on longer luxury 



cruises. This year passengers spent an es- 
timated $20,000,000 in San Francisco ho- 
tels and restaurants, and for shopping and 
entertainment. In addition, the average 
cruise ship spent $70,000 to $100,000 for 
goods and services in preparation of a San 
Francisco-based departure. The total eco- 
nomic impact that the cruise industry has 
on San Francisco from both direct and in- 
direct expenditures is estimated at be- 
tween $60,000,000 and $70,000,000 an- 
nually 

New cruise ships visiting San Francisco 
for the first time this year were Cunard's 
Sea Goddess I, Exploration Cruise Lines' 
Explorer Starship, Bermuda Cruise Line's 
Canada Star and Epirotiki Line's World 
Renaissance. 

The Port plans to further improve the 
Passenger Terminal by doubling the size of 
the facility and increasing the efficiency of 



moving passengers and baggage in and 
out of the terminal. A scheme currently un- 
der consideration would add Pier 33 to the 
present Pier 35 terminal allowing for the si- 
multaneous docking of two large cruiseli- 
ners and several of the smaller excursion 
boats. 

New at the Passenger Terminal this year 
were a hydraulic gangway and a passen- 
ger security system. The gangway de- 
signed and built by California Stevedore 
and Ballast Company operator of the Pas- 
senger Terminal, provides easier ship-to- 
terminal access and accommodates the 
varying ship configurations. 

The two magnometer screening sys- 
tems, similar to the security systems used 
at airports, were installed this year by 
CS&B at the request of the cruise lines. 




Ship Repair 




Ship repair berth days rose from 1 ,709 in 
1985-86 to 2,974 in 1986-87, a 74% 
increase. The four ship repair facilities at 
the Port, Continental Maritime, Service En- 
gineering, Southwest Marine and Todd, 
contributed $3,356,000 to the Port's reve- 
nue. In addition, these firms spent an esti- 
mated $87,000,000 elsewhere in the City 
for goods and services. 

San Francisco is the dominant ship re- 
pair base in Northern California. As the ma- 
jor employer of blue collar workers in San 
Francisco with an estimated available 
workforce of 3,000, ship repair has a far- 
reaching impact on the City and the entire 
Bay Area. Employment impact is figured at 
three to one; or for every direct ship repair 
job, three indirect jobs are created. This 
year's payroll for full-time workers was well 
over $100,000,000. 



The future growth of the ship repair in- 
dustry in San Francisco is closely lied to 
further commitments by the Navy to home- 
port vessels in San Francisco. The Navy 
now accounts for 88% of all ship repair 
work. 




Fishing Industry 

San Francisco is the leading wholesale 
fish receiving and distributing port on 
the West Coast, outside Alaska The Port 
has been working closely with the fishing 
industry this year to secure the future of 
commercial fishing and fish handling in 
San Francisco, 
A 1,500-foot breakwater designed to 



protect the fishing fleet at Fisherman's 
Wharf and the historic ships at Hyde Street 
Pier from destructive wave action was 
completed and dedicated in October 

1986. , ^ 

The design plan was completed tor the 
first phase of the new commercial fishing 
development at Fisherman's Wharf Upon 
completion m late 1989 (for the harbor 
berths) and mid-1990 (for the fish handling 
facilities). San Francisco will have a mod- 
ern, up-to-date commercial fishery which 
will remain competitive for decades to 
come A harbor feasibility report is being 
prepared in anticipation of Gal Boating 
Loan funding 

In the meantime, commercial fishing fa- 
cilities have continued to be upgraded Im- 
provements were made to the eleclncal 
system, fresh water supply system and 
lighting for the existing fishing boat berths 




7 



COMMERCIAL 

Revenues from commercial operations 
were $17,530,000 in fiscal year 1986- 
87. This IS an increase of 10.69% over the 
previous year. The major commercial item, 
rental revenues, was boosted 15% over fis- 
cal year 1985-86. 

Office vacancies on Port property were 
reduced substantially even under the weak 
market conditions that prevailed during the 
year While the vacancy rate in San Fran- 
cisco averaged 16%, the Port reduced its 
total office vacancies to 10%; and vacan- 
cies in the Ferry Building/World Trade Cen- 



ter dropped to 7%. In addition, negotia- 
tions with existing tenants in the Ferry 
Building/World Trade Center resulted in 
over $2 million of upgrading and renova- 
tion work to the building at the tenants' ex- 
pense. 

Several significant leases were awarded 
this year. A new 20-year lease for a marine 
center on the Southern Waterfront not only 
fills a gap in San Francisco's small boat 
services, but doubles the revenue the Port 
has been receiving from the site and brings 
the added potential of being able to pro- 
vide much higher revenues in the future. 

A lease was concluded with the San 
Francisco Police Department for the estab- 




lishment of a car-crushing facility at Pier 
70. This operation helps solve the city-wide 
problem of abandoned automobile dis- 
posal, and also provides the Port with new 
revenues in excess of $370,000. 

A particularly noteworthy accomplish- 
ment of the Finance and Administration di- 
vision this year was the expansion and up- 
grading of the Port's data processing 
capabilities. The Port's Data Processing 
Department successfully implemented a 
Novell Local Area Network of 25 personal 
computers. In addition to offering word 
processing, spread sheets, and other 
classic "PC" applications, all of the new 
work stations are capable of serving as 
user work stations for the existing micro- 
data minicomputers. This brings the num- 
ber of serviced users in operation from last 
year's 22, to a total of 47 this year or a 114% 
increase in user service. Simultaneously 
the Data Processing Department was able 
to lower Its 1986-87 operating budget to 
11 % under the 1985-86 budget. 

The financial condition of the Port contin- 
ues to be positive. Working capital reached 
$15,877,000 this year, a dramatic rise from 
zero in 1980. 



IN TOUCH WITH 
THE COMMUNITY 

The Port sponsored or participated in a 
number of community interest events 
this year The 5-mile Fleet Week Challenge 
Run along the waterfront in October and 
the Port Promenade Whaleboat Race held 
each May in conjunction with World Trade 
Week have become annual activities. Both 
are organized by the Port and sponsored 
by Friends of the Port. 

Festa Italiana was held for the fifth year 
in Pier 45. Co-sponsored by the Port, the 
four-day festival is scheduled around Co- 
lumbus Day Festa draws many people to 
Fisherman's Wharf, as does the Christmas 
season's Dickens Fair also held in Pier 45. 

Among the special events staged this 
year was the Great San Francisco Railroad 
Fair in April. The first railroad exhibit in San 
Francisco since 1915, the fair utilized the 
Port of San Francisco Belt Railway tracks 
on the northern waterfront. 

Control headquarters for the spectacu- 
lar light and sound fireworks display cele- 
brating the 50th birthday of the Bay Bridge 
was set up on the Ferry Building deck out- 
side the Port offices. 

Benefit runs, bicycle races, and many 
community activities have become com- 
mon occurrences along the Port of San 
Francisco waterfront. 



8 # 



PORT COMMISSION 

CITY AND COUNTY OF SAN FRANCISCO 

PORT OF SAN FRANCISCO 
FINANCIAL STATEMENTS 
AND ACCOUNTANTS' REPORT 

JUNE 30, 1987 AND 1986 



Table of 
Contents 



Accountants' report 



11 



Balance sheet 


12 


Statement of income and retained earnings 


13 


Statement of changes in financial position 


14 


Notes to financial statements 


15-20 



10# 



Accountants' 
Report 



The Honorable John C. Farrell, Controller. 
City and County of San Francisco: 



We have examined the balance sheet of the PORT COMMISSION, CITY AND 
COUNTY OF SAN FRANCISCO, PORT OF SAN FRANCISCO ( ■Port") as of 
June 30, 1987 and 1986, and the related statements of income and retained 
earnings and changes in financial position for the years then ended. Our 
examinations were made in accordance with generally accepted auditing 
standards and, accordingly, included such tests of the accounting records 
and such other auditing procedures as we considered necessary m the 
circumstances. 

In our opinion, the aforementioned financial statements present tairiy ;he 
financial position of the Port as of June 30, 1987 and 1986, and the results of its 
operations and the changes in its financial position for the years then ended, 
in conformity with generally accepted accounting principles applied on a 
consistent basis. 



Hood and Strong 
Morris, Davis & Company 
October 2, 1987 

) San Francisco, California 



Balance 
Sheet 

June 30, 1987 

and 1986 

(in thousands) 



Assets 




1987 


1986 




P'ach nrinpinjillw in f^itv TrpsQi ir\/ Pnrt nnpratinn 

fund 


$24,033 


$21,061 




Accounts receivable (less allowance for doubtful 
accounts: 1987— $711; 1986— $1,554) 


2,129 


2,348 




Accrued interest receivable 


896 


1,651 




Matpriai"? and <?unr)lip«; 


982 


91 1 




Prepaid insurance and othier assets 


1,550 


1,527 




Total Current A<?'=;et<; 


29,590 


27,498 


Restricted assets: 


Cash and short-term investments: 








Capital outlay 


26,740 


35,728 




Rnnd interest and redemntion 


9,768 


1 1 ,072 




Lessee deposits held in trust 


1,045 


885 




Total Restricted Assets 


37,553 


47,685 


Property, plant, 

and equipment — Net: 




180,650 


171,712 


Long-term receivable: 




346 


315 




Tntal 
lUlcti 






Liabilities 
and Eduitv 




1987 


1986 


Current liabilities: 


Accounts payable and accrued liabilities 


$10,081 


7,828 




Current maturitip<? of bonded debt 


3,635 


3,520 




Accrued bond interest payable 


253 


273 




Total Current Liabilities 


13 969 


1 1 ,621 


Payable from 
restricted assets: 


Accrued bond intere^st oavable 
Lessee deposits 


2,571 
1,045 


2,588 
885 




Total 


3,616 


3,473 


Deferred rentals: 




8,948 


9,283 


Bonded debt: 


Less current maturities 


85,232 


88,765 




Total 1 iahilitip«i 


111 ,765 


1 13,142 


Equity: 


Contributed capital 


15,208 


15,208 




Rpvaluatinn nf nrnnprtv 


56 063 


56 063 


• 


Retained earnings 


65,103 


62,797 




Total Equity 


136,374 


134,068 




Total 


$248,139 


$247,210 


The accompanying notes are an integral part of this statement. 



12 



statement 
of Income 
and Retained 
Earnings 

Years ended June 30, 
1987 and 1986 
(in thousands) 







1QR7 




Operating revenues: 


Property rentals— commercial 


$16,607 


$14,692 




Property rentals — maritime 


4,929 


4,803 




Wharfage, dockage, and demurrage 


5,670 


6,335 




our illltfcjiOlal puwci 




1 14^: 




Other 


1,328 


2,436 




lUldl wpcldllliy ncVcllUco 






Operating expenses; 


Operations 


11,030 


9.590 




Maintenance 


10,472 


9.592 




Depreciation 


4,129 


3,631 












Fire boat operations 


920 


927 




Total Operating Expenses 


27,284 


24.664 


Operating Income: 




2,173 


4,747 


Interest income: 




3,025 


3,193 


Interest expense: 




( 2,892) 


( 2.889) 


Net income: 




2,306 


5,051 


Retained earnings — 


Beginning of year: 


62,797 


57,746 


Retained earnings — 


End of year: 


$65,103 


$62,797 



The accompannying notes are an integral part of this statement 



statement 
of Changes 
in Financial 
Position 

Years ended June 30, 
1987 and 1986 
(in thousands) 







1987 


1986 


Sources of funds: 


Operations: 








Net Income 


$2,306 


$5,051 




Expenses not using working capital — 
depreciation and amortization 


4,231 


3,734 




Revenue not providing working capital — 
Fire insurance proceeds 




( 1,776) 




Recognition of deferred revenue 


( 335) 


( 486) 




Total From Operations 


6,202 


6,523 




Decrease in restricted assets 


10,132 






Increase in liabilities payable from restricted assets 


143 


2,600 




Total 


16,477 


9,123 


Uses of funds: 


Increase in restricted assets 




445 




Acquisition of property, plant, and equipment 


13,067 


4,232 




Reduction of noncurrent bonded debt 


3,635 


2,970 




Additional long-term receivable 


31 


315 




Total 


16,733 


7,962 


(Decrease) Increase 
in working capital: 




($ 256) 


$1,161 


Working capital 
increase (decrease) 
by component: 


Cash 

Accounts receivable 
Accrued interest receivable 


$ 2,972 
( 219) 
( 755) 


$ 949 
( 413) 
( 85) 




Materials and supplies 


71 


331 




Prepaid insurance and other assets 


23 


678 




Accounts payable and accrued liabilities 


( 2,253) 


( 240) 




Current maturities of bonded debt 


( 115) 






Accrued bond interest payable 


20 


( 59) 


(Decrease) Increase 
in working capital: 




($ 256) 


$1,161 


The accompanying notes are an integral pact of this statement. 

• 










m 





14 # 



I 



Notes to 

Financial 

Statements 



Note 1. 
Significant 
accounting policies 



Organization: The Port of San Francisco ("Port") is an enterprise fund of the 

City and County of San Francisco ("City"). A five-member Port Commission is 
responsible for its operation, development, and maintenance. Commission 
members are appointed by the City s Mayor for terms of four years. The Port is 
an integral part of the City, and the accompanying financial statements are 
included as a component of the City's Comprehensive Annual Financial Report. 

Prior to February 1969. the Port was owned by the State of California ( 'Sta' 
and administered by the San Francisco Port Authority a State agency In 
February 1969, the Port was transferred in trust to the City under the terms and 
conditions specified in the State statutes of 1968, Chapter 1333 ("Burton Act"), 
as amended, and ratified by the City's voters in November 1968 

Under the terms of the Burton Act. the State Legislature reserved the right to 
amend, modify or revoke, in whole or in part, the transfer of lands in trust, 
provided that the State would then assume all lawful obligations related to such 

lands. 

Lease Revenue: Lease revenue from the rental of building spaces, ground 
areas, and facilities is accounted for under the operating method. Under this 
method, lease revenue is earned as it becomes due and related expenses are 
recognized as incurred. 

Materials and Supplies: Materials and supplies are used for construction and 
maintenance of Port facilities and are stated at cost (approximates first-in, 

first-out method). 

Property, Plant and Equipment: Land transferred to the City in February 
1969 IS stated at an amount which includes an increase over historical cost of 
$56,063,000. This amount was recorded by the State in prior years to reflect 
appraised values in 1929. The Port's management estimates that the fair ma--' ' 
value of such land significantly exceeded recorded amounts at the time o' • 
transfer. 

Land acquired after February 1969 and land improvements are stated at cos: 
Land improvements (principally pavement and railroad tracks) with a cost of 
approximately $18,000,000 are not depreciated because, in the 
management, the assets will be maintained to provide mdefmitp 
Maintenance and repairs are expensed as incurred 

Interest paid on bond funds used for construction purposes n. 
earned on the temporary investment of the proceeds of such bo- 
capitalized from the date of borrowing through the construction i 

Other property plant and equipment is stated at cost and do: 
the straight-line method over the estimated useful lives of th . 



Notes to 

Financial 

Statements 

(continued) 



Note 2. 
Cash and 
investments 



The City's pooled cash and investments are invested pursuant to investment 
policy guidelines established by the City Treasurer. The objectives of the policy 
are, in order of priority preservation of capital, liquidity and yield. The policy 
addresses soundness of financial institutions in which the City will deposit 
funds, types of investment instruments as permitted by the California Govern- 
ment Code, and the percentage of the portfolio which may be invested in 
certain instruments with longer terms to maturity In addition, a City ordinance 
prohibits deposits and investments with financial institutions having specified 
relations with either the government of South Africa or certain private entities 
doing business with or in South Africa The Comprehensive Annual Financial 
Report of the City categorizes the level of risk associated with the City's pooled 
cash and investments. 

The Port is required by bond indenture to invest excess funds related to the 
bonds in government obligations and certificates of deposit. 

The Port's separate investments, including those held by trustees, are catego- 
rized below to give an indication of the level of risk assumed by the Port at year- 
end. Category 1 includes investments that are insured or registered or for 
which the securities are held by the Port or its agent in the Port's name. Category 
2 includes uninsured and unregistered investments for which the securities 
are held by the broker or dealer's trust department or agent in the Port's name 
Category 3 includes uninsured and unregistered investments for which the 
securities are held by the broker or dealer, or by its trust department or agent 
but not in the Port's name. 

At June 30. 1987 and 1986, cash and investments held by trustees includes the 
following (in thousands); 



Type of investment 



Category 1987 



1986 



Negotiable certificates of deposit 
U.S. Agency Instruments 
Certificates of Deposit 
Cash Deposits — Trustees 



$ 7,755 

3 $9,762 2,689 
1 6 52 

576 



$9,768 $11,072 



The cost approximates market value. The investments generally mature within 
one year. The investment categories refer to June 30, 1987 balances only 
Comparative information for 1986 investments is not available 



1^ 



Notes to 

Financial 

Statements 

(continued) 



Note 3. 

Property, plant, 
and equipment 



Note 4. 

Deferred rentals 



At June 30, 1987 and 1986, property, plant and equipment consisted of (in 

tliousands): 



Estimated 
Useful Life 





1987 


1986 


(Years) 


Land and land improvements 

Buildings, structures and related 
improvements 

Equipment 


131,819 
4,759 


128.509 
4 369 


5-50 
5-40 


Total 

Less depreciation and amortization 


252,382 
(85,319) 


248,634 
(81,245) 




Net 

Construction work in progress 


167,063 
13,587 


167.389 
4.323 




Total 


SI 80,650 


S171 712 





Total interest cost was $6,854,000 and $7,020,000 for fiscal years 1987 and 
1986 of which $3,962,000 and $4,131 ,000 was capitalized, respectively Total 
interest earned was $6,018,000 and $7,324,000 for fiscal years 1987 and 1986 
of which $2,993,000 and $4,131 .000 was capitalized, respectively 

The cost of fully depreciated assets still m use was approximately $48,000,000 
and $42,200,000 at June 30, 1987 and 1986, respectively 



During 1983, the Port acquired land, subject to a thirty-year tenant lease, on 
the condition that the Port not exercise its option to take possession of such 
property until termination of the lease The $9,900,000 property value received 
has been included in land and deferred rentals. The deferred rentals related 
to this land, $8, 400, 000 and $8, 730, 000 at June 30 1987 and '^°<~ ^"-t - — 
recognized as rental revenue over the thirty-year lease term 



17 





Notes to 

Financial 

Statements 

(continued) 




The revenue bonds require that net revenues of the Port, as defined, be at least 
1 .3 times the debt service requirements of such bonds for the following twelve 
months. Certain bond resolutions require that the Port maintain funds for the 
purpose of accumulating assets which are restricted to interest and principal 
payments. Such resolutions prescribe the amounts to be accumulated and the 
types of securities in which the restricted assets may be invested, as discussed 
in Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds may be 
used for reconstruction of the property or for construction of related property If 
the proceeds are not used for those purposes, they must be applied to the 
redemption of bonds as provided in Article III, Port Commission Resolution 
Number 5231 . At June 30, 1987 and 1986, restricted capital outlay funds 
included unexpended fire insurance proceeds of $2,203,000 and $2,702,000, 
respectively 




Note 6. 
Operating 

Property rentals 


Certain of the Port's property rental agreements specify rental payments based 
on a percentage of tenant sales, subject to a minimum amount. Property rental 
revenues were compriseu as loiiows ^in inousanos;. 

1987 1986 






f\/linimum rentals $17,766 


$16,235 






Percentage rentals 3,770 


3,260 






$21,536 


$19,495 






Minimum future rental income under noncancellable operating leases having 
terms in excess of one year are as follows (in thousands): 






Year ending June 30: 








1988 


$7,245 






1989 


6,838 






1990 


6,472 






1991 


6,344 






1992 


6,081 






Thereafter 


174,210 






Total 


$207,190 






Property subject to operating leases and property held 
for lease at June 30, 1987 consisted of (in thousands): 








Land and land improvements 


$28,080 






Buildings, structures, and related improvements (at cost, less 
accumulated depreciation of $48,642) 


5,358 






Total 


$33,438 




Note 7. 

Employee benefit 
plans 

• 


Pension Plans: The City has a defined benefit retirement plan which is 
administered by the San Francisco City and County Employees' Retirement 
System ("City Retirement System"). The majority of full-time employees of the 
Port participate in this plan along with other employees of the City Certain 
employees who commenced their employment at the Port prior to February 
1969, participate in the State of California Public Employees' Retirement System 
("PERS"). These plans provide death, disability and service retirement benefits. 
Benefits are based on average final compensation, years of service and limited 
required cost-of-living increases. 



1» 



Notes to 

Financial 

Statements 

jntinued) 



Note 5. 
Bonded debt 



At June 30, 1987 and 1986, bonded debt consisted of (in thousands): 



Interest 



Fiscal 
Year Last 





Rate Series 
(%) Matures 


Balance 
1987 


Balance 
1986 


General Obligation Bonds: 

State of California: 
1 niro oeawaii lyio 


4.0 


1989 






rllin OcdWdll lyOO, oclico 

B, F. G, and H 


1.0-4.85 


1999 


12,075 


13.710 


City and County of San 
Francisco — Harbor 
Improvement 1971 : 
Series A 


4.5-6.0 


2003 


12,800 


13.600 


Series B 


5.4-6.75 


2005 


7,200 


7.600 


tUldl OcJiltJial L^UIiyallUll 

Bonds 






32,315 


35.285 


Revenue Bonds: 


7.0-8.5 


2000 






Clorioc R 1Q71 


5.25-6.75 


2002 


6 800 


7 050 




9.5-11 5 


2010 






Total Revenue Bonds 






58,200 


58.750 


Tnfal RnnrloH Roht 
lUldl DUliUcU VJcul 








04 035 


Less: 










Current maturities 






3,635 


3.520 


Unamortized discount — 
Revenue Bond Series C 






1,648 


1 750 


Total Long-Term Bonded Debt 






$85,232 


$88 765 


1 ne Donos mature as loiiows ( 


n thousands): 








Year Ending State of 
June 30 California 


City and 
County of 
San Francisco 






Total 


1988 $1,770 






$665 


$.• 


1989 1.740 


1.200 




760 


3.700 


1990 1,635 


1.200 




880 


3715 


1991 1,060 


1.200 




1.065 




1992 1,055 


1.200 








Thereafter 5,055 


14.000 








Total $12315 


$?0 000 




$58 u 





The revenue bonds are collateralized by the net rev. 
by the bond resolution, are subordinated to thr : 
the Slate, and are on a parity with any future ' 

obligation boni ' ' ' 'heCity aresubcrdinda'u lo iiic icvciiou uoiiv.. 

and any future )3 



Notes to 

Financial 

Statements 

(continued) 



Note 7. 

Employee benefit 
plans 

(continued) 



Note 8. 
Related party 
transactions 



Note 9. 

Commitments 
and contingent 
liabilities 



The pension plans are financed primanly by (a) employer contributions which 
include contributions from the Port: (b) employee contributions; and (c) income 
from investments. Employer contribution rales are established by the City 
Retirement System and PERS. based on actuarial valuations which consider 
both unfunded past service costs and current costs and are designed tc 
amortize past service costs through the year 20(X) Contributions include 
operating expenses were approximately $1 .373.000 and $1 .454.000 for fiscai 
1987 and 1986. respectively 

The Plans' assets, liabilities, and benefits are not allocated to individual entities. 
Information on total net assets available for pension benefits and the actuanal 
present value of accumulated plan benefits for the City Retirement System are 
included m the City's Comprehensive Annual Financial Report 

Prior to 1987. the Port was obligated to annually contribute $169 000 unii, 
July 1 , 1998 to the State PERS for settlement of an unfunded liability In 1987. 
the Port suspended payments based on advice of the PERS actuaries The 
remaining unfunded liability at June 30. 1987 (amounting to approximately 
$650 000). IS expected to be eliminated as a result of actuarial gams 

Deferred Compensation Plan: The City offers its employees a deferred con^i- 
pensation plan created in accordance with Internal Revenue Code Section 
457 The plan, available to all Port employees, permits them to defer a portion 
of their salary until future years. 

The amount of assets and related participant obligations for Port employees is 
not separable from the total City plan The total plan assets and obhoT - '~ ■ 
are accounted for m an agency fund of the City and are included m • 
Comprehensive Annual Financial Report 

Health Care Benefits — Retired Employees: The Pen pro. aes neaan care 

benefits for retired employees Substantially all of the employees may beconne 
eligible for these benefits it they reach normal retirement age Those benefits 
and similar benefits for active employees, are provided through the City's 
Health Care System. The Port recognizes the cost of providing the benefits b , 
expensing the annual insurance premiums, which were approximately 
$210,000 and $158,000 for the years ended June 30. 1987 and 1986. respec- 
tively The cost of providing benefits for the retirees is not separable ^'o-^ '^^e 
cost of providing benefits for the active employees. 

The City performs certain administrative services such as cash disbursemer- 
and investment for all fund groups within the City The Port is charged for these 
services based upon the City s indirect cost allocation plan Other City depart- 
ments, primarily the fire department and the City attorney s office, provide 
certain services which are charged directly to the Port The cost of all of the 
services combined included as operating expenses m the statement of income 
was approximately $2,400,000 m 1987 and $2,200,000 in 1986. 

Included in accounts payable and accrued liabilities are amounts due to 1 . 
departments of approximately $2.441 .000 and $207,000 at June 30. 1987 ana 
1986. respectively 

The Port is presently planning various development proiecis .vnicn ,i v.q ve a 
commitment to expend significant capital funds The Port had firm purchase 
commitments at June 30. 1987 for approximately $2,635,000 for construction 
material and services. 

Under a management advisory contract signed in December 1973. the Port 
transferred its railroad operations to Port Railroad, inc. for a period of twenty 
years The contract is cancellable by Port Railroad Inc with nine months' 
written notice. 

The Port is a defendant in variQos aASjits. most aea vv ;r, pefsora - 
property damage resulting from accident or fire and are covered by insurance 
A substantial number of the lawsuits are m the discovery stages and counsel 
to the Port cannot express an opinion as to the possible outcome o' such 
litigation. However m the opinion of counsel the likelihood of ar 
outcome is probable in some of the suits and. accordingly ace , . 
include an accrual for the aggregate amount of deductibles under a 
insurance policies The ultimate resolution of such matters is not expc..;^ j :z. 
have a material effect on the Port's financial position or results of operations 



2(^ 



If you wish your name to be added 
to our mailing list, please contact: 

Wharfside. 

The Port of San Francisco 

Ferry Building 

San Francisco, CA 94TI1 

(415) 391-8000 
Fax: (415) 398-1269 
Telex: 275940 PSF UR 
Cable: SFPORTCOMM 

Eugene L. Gartland, Executive Director 
Ronald L. Stone, Director, Maritime 
Affairs 

John F Conrad, Director, Administration 
and Finance 

Arthur M. Osborne, Director, 
Engineering and Maintenance 

Port Commissioners: 

Dr Arthur H. Coleman, President 

James J. Rudden, Vice President 

James R. Herman 

Anne W. Halsted 

William H.C. Chang 

Agency Representation: 
JAPAN 

Nippon Maiitime Co., Ltd. 

Maritime Building 
14-1 Botan 1-Chome, Kohtoh-Ku 
Tokyo 135, Japan 
Telephone: 03 (641)7831 
Telex: 78122263 NMC 

TAIWAN 

Grand Vforld Shipping 
Agencies Ltd. 

Asia Enterprise Center, 7th Floor 
602 Minchuan East Road 
Taipei, Taiwan 
Telephone: (02) 7169555 
Telex: 13072 GRANAGEN 

LATIN AMERICA 

Carlos A. Massera 

Republica do Peru 124, #401 

Copacabana 

Rio de Janeiro 

Brazil 

Telephone (55) (021 ) 257-0232 

U.S. MIDWEST 
Trans Trade Inc. 

5105 Tollview Drive, Rolling Meadows, 
IL 60008 

(312) 577-4484, Telex: 275319 PTCHI UR 

Wharfside is published bi-monthly 
by the Port of San Francisco 

Editor: Nancy F Pitt 
Design: Williams & Ziller Design 
Photographs: 
Air News Photos 



SPECIAL ANNUAL REPORT ISSUE 
WITH PROJECTS IN PROGRESS 



Fronf coTOr; .M V ACT 12 inaugurated ACT/PACE service to San Francisco. 



Highlights of 
1987/88 



■ Operating income nearly doubled last year reaching 
$4,154,000. 

■ Cargo tonnage increased 8% and totaled 3,159,000 metric 
revenue tons. 

■ TWO new cargo lines moved their Bay Area operations to the 
Port of San Francisco— Blue Star Line and ACT/PACE. 

■ A U.S. Customs Centralized Examination Station was estab- 
lished on-dock at North Container Terminal. 

■ Two new Hyundai/Paceco container cranes at North Con- 
tainer Terminal became operational. 

■ Access channels to a 42-foot depth were dredged to North 
and South Container Terminals. 

■ The Port signed a lease agreement with Southwest Marine 
for the former Todd Shipyard property that includes approxi- 
mately $12.5 million in ship repair equipment, drydocks and 
cranes, acquired by the Port as a result of a lease termination 
agreement with Todd Shipyard. 

■ A conceptual plan for the development of commercial fish- 
ing facilities at Fisherman's Wharf was adopted by the Port 
Commission. 

■ A Cruise Industry Task Force was formed to attract more 
cruise ships and more cruise passengers to San Francisco. 

■ Approximately 300 building permits were processed by the 
Port Engineering Department. 

■ A record 23 teams competed in this year's annual Port Prom- 
enade Whaleboat Race held each May. For the fourth consec- 
utive year, the Port and Friends of the Port co-sponsored the 
October Fleet Week Challenge Run. 

■ The year brought changes in leadership to the City and the 
Port. In January 1988, Art Agnos became mayor of the City of 
San Francisco and Velio Kiisk was named acting executive 
director of the Port. Anne Hoisted was elected president of the 
Port Commission and James Herman, vice president. 



1 



Financial 



In fiscal year 1987/88 the Port of San 
Francisco's operating revenues were 
$29,745,000 resulting in a sligfit increase 
over 1986/87. This, together v^/ith a decrease 
in expenses, gave the Port an operating 
income of $4,154,000, an increase of 
$1 ,981 ,000 over 1986/87. Usually, net in- 
come is "the bottom line"— the figure used 
to compare this year with previous years 
and to assess how the Port fared. However 
the 1987/88 net income, $16,661,000, in- 
cludes property assets acquired by the 
Todd Shipyard lease termination which 
caused this year's figure to be a whopping 
$14,355,000 over last year's. For this rea- 
son, operating income gives a clearer pic- 
ture of available income and of just how the 
year shaped up for the Port. 

The Port's accounting department re- 
ports significant- gain this year in decreas- 
ing accounts receivable and in setting up 
a cost accounting system. Accounts re- 
ceivable decreased by $379,000, or 22%, 
to $1.3 million during the 1987/88 fiscal 
year. This was due to the continued en- 
forcement of the Port's aggressive collec- 
tion policy 

The conceptual design for a facility cost 
accounting system is in the final stages. 
When completed and implemented, the 
system will provide revenue and expense 
information by individual facility 



Cargo Operations 

San Francisco became a stronger player 
in the Australia/New Zealand trade this 
year when two new shipping lines — Blue 
Star Line and ACT/PACE— shifted their Bay 
Area operations to San Francisco. Blue 
Star Line's West Coast service calls ports 
in New Zealand and several Pacific islands 
(Hawaii, American Samoa, Fiji and Tahiti), 
while ACT/PACE calls ports in Australia with 
occasional calls in Hawaii, Fiji and New 
Caledonia on the northbound voyages. 
They join two other lines that operate in the 
Australia/New Zealand trade route from 
San Francisco. Columbus Line, a long-time 
user of the Port of San Francisco, calls both 
New Zealand and Australia. Nedlloyd 
ships serve Western Australia. Although 
Blue Star Line and ACT/PACE did not move 
to San Francisco until near the end of the 
fiscal year, the additional tonnage resulted 
in an increase of one percent in the share 
of San Francisco's cargo that is carried in 
the Australia/New Zealand trade. 

The transpacific route continues to dom- 
inate the trade through San Francisco, in 
fiscal year 1987/88 this trade route ac- 
counted for 66% of the general cargo, 
nearly the same as last year. 



2^, 



During 1987/88 fiscal year, 532 general 
cargo vessels and 31 bulk vessels called 
the Port of San Francisco. The Port handled 
a total of 3, 159,000 metric revenue tons, an 
increase of 8% over the previous year. San 
Francisco now has a 17% market share of 
foreign cargo moving through the Bay 
Area, up from 15% in 1986/87. 

Looking at the tonnage by mode, con- 
tainer tonnage continued to increase as 
breakbulk tonnage declined. A total of 
123,490 TEUs were handled by the Port in 
1987/88. Bulk cargoes which account for 
only 6% of the total tonnage of the Port av- 
eraged out to about the same as last year. 
However, this year it was the liquid bulk (tal- 
low and coconut oil) that enjoyed an in- 
crease while dry bulk (fish meal and 
grains) declined. 

Exports rose 12% this year, compared to 
4% for imports, and constitute 53% of the 
Port of San Francisco's total trade. Leading . 



exports were animal feed, cotton, waste 
paper, iron and steel scrap, fruit and nuts, 
and synthetic resin; while major imports 
were newsprint, coffee, autos, fishmeal 
and beverages. 

A U.S. Customs Centralized Examination 
Station (CES) was established at the Port 
of San Francisco in August 1987 The new 
centralized inspection system was estab- 
lished by Customs to provide increased 
service with fewer inspectors. The Port fa- 
cility located in Shed D, North Container 
Terminal, was selected to be one of four 
Bay Area examination sites. By operating 
a CES on San Francisco's docks, the Port 
could provide an additional sen/ice for car- 
riers that use Port of San Francisco termi- 
nals. This CES offers the easiest clearance 
of ocean cargo entering the Port of San 
Francisco. The facility is operated for the 
Port of San Francisco by Port Distribution 
Center. 



2,619 



2,315 



TONNAGE BY MODE 
(in OOO's) 




Fiscal Year 1987 



Fiscal Year 1988 




3 



By reaching higher and wider and dig- 
ging deeper the Port continued enhancing 
its facilities to accommodate the latest 
generation of container ships. In May, test- 
ing was completed and certification issued 
on the two new post-panamax Hyundai/ 
Paceco container cranes at North Con- 
tainer Terminal. The 100-gauge, 40-long- 
ton cranes have a clear lift height of 95 feet 
and an outreach of 130 feet. Recently these 
cranes operated at 47 moves per hour, a 
new record for the Port of San Francisco. 
The 1970's vintage "first generation" crane 
at North Terminal was sold in February The 
30-long-ton Paceco was the first container 
crane in operation at the Port of San Fran- 
cisco. 

Two container cranes at South Container 
Terminal are scheduled to be raised during 
the 1988/89 fiscal year which will give these 
cranes a clear lift above high water of 103 
feet/6 inches. 

Other facility improvements included the 



installation of pile supported crane rails for 
the new cranes and extensive repaving at 
North Terminal. Supplemental lighting was 
added at South Terminal. 

Two new access channels more nearly 
paralleling the natural tidal currents in the 
Bay were dredged to North and South Ter- 
minals. Dredged to a depth of 42 feet, the 
new channels can accommodate the larg- 
est container ships that enter the Bay and 
allow more maneuverability in docking 
under all tide and current conditions. San 
Francisco's access channels are currently 
the deepest general cargo channels in the 
Bay Area, yet only 700,000 cubic yards of 
bay mud needed to be removed. These 
two new access channels together with the 
two previously established channels allow 
ships broad docking flexibility Additional 
navigational aids were installed to mark the 
new channels and their entrances. 

Further dredging is scheduled for the 
1988/89 fiscal year following the approval 



of a $1 .2 million dollar maintenance dredg- 
ing program. Dredging will be conducted 
around the container terminals, passenger 
terminal and other piers. 

A new contract was negotiated with For- 
eign Trade Services to continue operating 
Foreign Trade Zone #3 for the Port. The 
Port and operator will be cooperating in 
marketing the zone. 

A haycube transloading facility was es- 
tablished in San Francisco increasing the 
cargo base for California agricultural prod- 
ucts. Hay cubes are the largest export 
cargo from Northern California to Japan. 
The facility doubled its size in its first year 
of operation. 

At the close of the fiscal year, June 30, 
1988, negotations were underway with two 
separate companiies that would increase 
the trade opportunities for shipping lines 
using the Port of San Francisco. Since then, 
a lease has been signed with Parker Ware- 
house, the largest and oldest cotton ware- 



CONTAINER CARGO EXPORTS/IMPORTS 
Metric Revenue Tons (thousands) 



1600 
1500 
1400 
1300 
1200 
1100 
1000 
900 
800 
700 
600 
500 
400 
300 
200 
100 



82 83 84 85 86 

Fiscal Years 



87 



88 



PERCENT OF GENERAL CARGO 
BY TRADE ROUTE 

Total Fiscal Year 1988 



.1% Other 
1% Africa 



5% Australia/New Zealand 



5% Europe 



8% 

South/Central America 



6% 

Canada 



8% 

Southeast Asia 




4 





house operator in the area, establishing a 
large-volume cotton warehouse at Pier 15/ 
17. 

In East Stockton, an agreennent with 
Stockton Terminal and Eastern Railroad 
Company established an "inland Port an- 
nex" to serve as a nation-wide distribution 
center for imported goods as well as an 



export center tor Northern California prod- 
ucts. The annex consists of ample ware- 
housing in an uncongested area with ac- 
cess to multiple freeway and rail systems. 

One very important event straddling the 
fiscal years was the acquisition of Southern 
Pacific Railroad by the Denver Rio Grande 
and Western Railroad. This action paves 



the way for a true partnership in intermodal 
activities with the "new" Southern Pacilic 
Lines and the opportunity to move lonward 
on a tunnel modification program that will 
give the Port of San Francisco double stacK 
capabilities 



5 




Windstar Sail Cruises picked San Francisco to preview its new high tech sailing ship Wind Song. 



Cruise Operations 

The Port of San Francisco last spring 
spearheaded formation of a Cruise In- 
dustry Task Force composed of represen- 
tatives of the travel, tourist, and service in- 
dustries; in fact anyone with an interest or 
stake in the future of San Francisco's cruise 
business was invited to participate. The 
Task Force was charged with examining 
the market and developing strategies to 
attract new cruise lines to San Francisco 
and to create a greater customer demand 
for San Francisco as a port-of-call. 

Surveys of cruise passengers have 
shown that San Francisco is their favorite 
U.S. port — and their fourth favorite of all 
ports in the world. Then why should San 
Francisco need to market itself? 

From 1980 the number of cruise ships 
calling San Francisco and the number of 
passengers coming through our passen- 
ger terminal had steadily increased — until 
last year. The initial decline was attributed 
to a comparison with the inflated 1986 fig- 
ures when the Vancouver Expo and fears 
of terronsm in the Mediteranean brought 
more ships to the West Coast. However, the 
trend toward shorter cruises departing 
from ports closer to their destinations 
clearly has affected the number of ships 
and passengers coming to San Francisco. 
This year 45,000 passengers embarked or 
disembarked at San Francisco on 83 ship 
calls. This 38% decrease is attributed 
partly to the shift by Princess Cruises of its 
embarkation port for Alaska cruises from 
San Francisco to Vancouver. The Task 
Force is a unified regional effort to counter 
this trend and to expand San Francisco's 
cruise market. 

The cruise industry directly contributes 
over $60 million annually to the local econ- 
omy and over 600 jobs in the transportation, 
hotel, restaurant, retail and entertainment 
industries, according to a recent impact 
study Each ship call generates $434,500 
of direct local revenues ($1 ,373,020 of di- 
rect, indirect and induced revenues) for 
the City Each passenger that embarks or 
disemtDarks at the Port of San Francisco 
creates a total economic impact of more 
than $1,800. 

This year the newly built Wind Song, a 
150-passnger, four-masted sailing ship, 
came to San Francisco before heading to 
French Polynesia for its regular cruises 
through the islands. This unique vessel 
combines the romance of sailing with the 
efficiency of modern technology With Cal- 
ifornia accounting for a large percentage 
of the world's total cruise passengers, 
cruise operators often choose San Fran- 
cisco to introduce and promote new ships. 
During 1988/89, three cruiseships are 
being christened or re-christened in San 
Francisco. 



Ship Repair Operations 

Southwest Marine relocated its ship re- 
pair operation from Pier 28 to the former 
Todd Shipyard property adjacent to Pier 
70, signing a 30-year lease on approxi- 
mately 24 acres of the property This gives 
Southwest Marine the use of two dry- 
docks— a 21 , 000-ton and a 65,500-ton. 

Through a settlement with Todd Ship- 
yard for terminating its lease after closure 
of its San Francisco operation, the Port ac- 



quired ownership of the drydocks and 
cranes. This acquired property is included 
under "other revenues" in the financial 
statement. 

In 1987/88 San Francisco's major ship 
repair facilities contributed $3 million to the 
Port's revenue. This is a 12% decrease 
from the previous year, the result of con- 
solidation of the industry and the reduction 
of from four to three companies on the San 
Francisco waterfront. 



6 



PROJECTS IN PROGRESS 



Fisherman's Wharf 
Seafood Center 

The 1987/88 season was excellent for 
the Dungeness crab fishermen in San 
Francisco when the catch totaled 3.1 mil- 
lion pounds, the highest here since the 
1959/60 season. Herring, which has a 
quota each year based on the estimated 
number of herring in the Bay, had a quota 
of 8,500 tons for 1987/88. Actual catch was 
8,726 tons. While traditionally the most im- 
portant seafood landed in San Francisco, 
these are not the only species caught here. 
The diversity of harvest has steadily in- 
creased and now includes large numbers 
of rockfish and sablefish. As a result of 
this activity and the rapidly growing public 
demand for more high quality seafood, 
expanded and improved facilities are 
needed. 

In August 1987, the Port Commission 
adopted a conceptual development plan 
that would make Fisherman's Wharf one of 
the largest, most modern and most visible 
commercial fishing harbors in the United 
States. This plan grew out of the need for 
more efficient and up-to-date facilities for 
the commercial fish industry and was de- 
veloped through a joint effort of the Port, 
fishing industry business and resident 
groups. The plan calls for the construction 
of new commercial fishing berths at the 
foot of Hyde Street, for the development of 
new fish handling space on Pier 45, and for 
the addition of storage and support facili- 
ties at Hyde Street, Pier 45 and Fish Alley 
Other facilities that could be included in the 
redeveloped Pier 45 are a farmer's mar- 
ket-style seafood retail operation, a flume 
tank to test fishing gear, and outlets for 
aquaculturists. 

A consultant team was selected to de- 
sign the first phase of the development. 
The team presented the final engineering 
designs for both the harbor and for the new 
or rehabilitated facilities together with an 
economic feasibility report on the project 
to the Commission in October 1988. Con- 
struction is expected to begin on the $22.8 
million project in March 1990 and take 
about 16 months. 



Northern Waterfront 
Redevelopment Survey 

A planning study for the Northern Water- 
front, an area that includes Fisher- 
man's Wharf, Piers 33-35, Pier 39 and Mu- 
nicipal Pier, is being prepared under the 
joint direction of the Redevelopment Agen- 
cy Planning Department and the Port. The 
study will determine how best to develop 
or redevelop land and facilities in the study 
area. 

Consultants, hired to assist in the study 
made a preliminary report of proposed 
project preferences and design solutions 
to the Fisherman's Wharf Citizens Advisory 
Council January 18. 



Intermodal Projects 

The Port is currently negotiating an 
agreement with Southern Pacific for in- 
termodal improvements to accommodate 
double stack trains. The rounded configu- 
ration and insufficient height of two tunnels 
on the San Francisco peninsula currently 
prevent the Port from offering double stack 
service. Under a tunnel modification pro- 
gram, the roadbed in the tunnels will be 
lowered adding the space needed to ac- 
commodate two 9'6" containers; high, 
wide and heavy loads, and tri-level auto 
carriers. 

In order to move the project along as 
quickly as possible. Southern Pacific will 
contract for the design of the tunnel modi- 
cation at the same time the negotiations 
are going on October 1989 is the target 
date for completion of the project. 



Pier 7 

Construction of the new public access 
and fishing pier may begin in 1989 A 
bid package has been prepared integrat- 
ing the plans and specifications of the 



project consultants and those of the Port 
Engineering Staff. The project consists of 
building an 837-foot-long recreation pier 
in the vicinity of the existing Pier 7. (Both 
the existing Pier 7 and Pier 5 will be re- 
moved.) The pier will be well-lighted utiliz- 
ing vintage-type street lamps and will be 
equipped with benches and fish cleaning 
tables. An ornamental iron handrail will 
completely encompass the pier. Funding 
for the project is by the Port, Recreation 
and Park Department, Wildlife Conserva- 
tion Board and the California Coastal Con- 
servancy 

The project will go out for bid in the 
spring of 1989. Cost, including the cost of 
demolishing the two piers, has been esti- 
mated at $6-5 million. 



RACERS Project 

The Port of San Francisco together with 
other members of the Golden Gate 
Ports Association is cooperating with U S 
Customs and the U S Maritime Administra- 
tion in the RACERS study project The 
study explores the advantages of regional 
port groups providing electronic ties with 
Customs, on a community basis, to ship- 
ping companies, exporters and brokers, 
as opposed to the individual set-ups that 
some larger shipping companies and bro- 
kers now have 



Piers 24-26 

Following discussions with yachting and 
boating groups over ihe past year, a 
Request for Proposals for the development 
of an International Maritime and Yachting 
Center on Piers 24 and 26 was issued m 
early January. 1989 The Center would be 
designed to promote sailing and yachting 
as major businesses and recreational out- 
lets, and to highlight the valuable cultural, 
sporting and educational resources that 
these industries and associated activities 



7 



provide San Francisco. Some of the uses 
that could be included are; yacht berthing, 
designing, sailmaking, sailing school, 
charters, tours, competitions, trade shows 
and exhibits, boat rental, and public pro- 
grams and activities relating to boating. 

A pre-proposal conference was held 
the end of January and the proposals are 
due April 17. 



Cruise Industry 
Task Force 

An aggressive marketing plan for at- 
tracting more cruise business to San 
Francisco was unveiled by the Task Force 
in September. Directed at travel agents, 
cruise operators and the traveling public, 
the program will raise San Francisco's 
"destination profile" at trade shows, in the 



offices of travel agents and in the media. 
Implementation of the program will begin 
in 1989. 



Embarcadero Parkway 
and Transit Projects 

The Final Report of the Embarcadero 
Urban Design Study was completed in 
December. The Design Study lays out 
plans for the Embarcadero Parkway a 
beautification project which will provide a 
park-like right-of-way the length of the Em- 
barcadero from King Street to Fisherman's 
Wharf. Included in these plans is a MUNI 
Metro turnaround for the Market Street 
subway along (or under) the Embarcadero, 
a light rail transit from Market Street south 
to the Mission Bay Project Area, and the F- 
Line historic streetcar system from Market 
Street to Fisherman's Wharf. The roadway 



and significant adjoining parcels are under 
the ownership and jurisdiction of the Port 
of San Francisco. However, a number of 
city agencies are participating in varying 
degrees — Department of Public Works, 
Public Utilities Commission, Redevelop- 
ment Agency Department of City Plan- 
ning, Arts Commission and Recreation and 
Parks Department. Port of San Francisco 
representatives serve on both the Manage- 
ment Oversight Committee and the Tech- 
nical Advisory Committee. 

A Draft Environmental Assessment for 
the roadway is scheduled for release next 
summer (1989) followed by public hear- 
ings in the fall. An Environmental Clear- 
ance is expected in early 1990, barring any 
significant environmental impacts. The 
granting of Environmental Clearance will 
allow roadway project construction to 
begin in the fall of 1991, with completion 
scheduled for mid-1993. 



8 




PORT COMMISSION 

CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 



FINANCIAL STATEMENTS 
AND 

INDEPENDENT AUDITORS' REPORT 
JUNE 30, 1988 AND 1987 



9 



Table of 
Contents 



Independent auditors' report 


11 


Balance sheet 


12 


Statement of income and retained earnings 


13 


Statement of changes in financial position 


14 


Notes to financial statements 


15-20 



10 



Independent 

Auditors' 

Report 



The Honorable John C. Farrell, Controller, 
City and County of San Francisco: 



We have audited the accompanying balance sheet of the PORT COMMISSION, 
CITY AND COUNTY OF SAN FRANCISCO, PORT OF SAN FRANCISCO ("Port") 
as of June 30, 1988 and 1987, and the related statements of income and 
retained earnings, and changes in financial position for the years then ended. 
These financial statements are the responsibility of the Port's management. 
Our responsibility is to express an opinion on these financial statements based 
on our audits. 

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are free 
of material misstatement. An audit includes examining, on a test basis, evi- 
dence supporting the amounts and disclosures in the financial statements. An 
audit also includes assessing the accounting principles used and significant 
estimates made by management, as well as evaluating the overall financial 
statement presentation. We believe that our audits provide a reasonable basis 
for our opinion. 

In our opinion, the financial statements referred to above present fairly in all 
material respects, the financial position of the Port as of June 30, 1988 and 
1987, and the results of its operations and changes in its financial position 
for the years then ended, in conformity with generally accepted accounting 
principles. 



Hood and Strong 
Morris, Davis & Company 
September 26, 1988 
San Francisco, California 



11 



Balance 
Sheet 

June 30, 1988 

and 1987 

(In thousands) 



Assets 




1988 


1987 


Current assets: 


Cash and investments, principally in City 
Treasury — Port operating fund 


$23,536 


$24,033 




Accounts receivable (less allowance for doubtful 
accounts. 19oo — $-307; 1987 — $711) 


2,126 


2,129 




Accrued interest receivable 


871 


896 




Materials and supplies 


1,210 


982 




Prepaid insurance and other assets 


1,113 


1,550 




Total Current Assets 


28,856 


29,590 


Restricted assets: 


Cash and short-term investments: 








Capital outlay 


17,981 


26,740 




Bond interest and redemption 


9,840 


9,768 




Lessee deposits held in trust 


1,340 


1,045 




Total Restricted Assets 


29,161 


37,553 


Property, plant, 

and equipment — Net 




188,964 


180,650 


Long-term receivable 




385 


346 




Total 


$247,366 


$248,139 


Liabilities 
and Equity 


Current liabilities: 


Accounts payable and accrued liabilities 


$4,309 


10.081 




Current maturities of bonded debt 


3,700 


3,635 




Accrued bond interest payable 


231 


253 




Total Current Liabilities 


8,240 


13,969 


Payable from 
restricted assets: 


Accrued bond interest payable 
Lessee deposits 


2,548 
1,340 


2,571 
1,045 




Total 


3,888 


3,616 


Deferred revenue 




569 


8,948 


Bonded debt — Less 
current maturities 




81,634 


85,232 




Total Liabilities 


94,331 


111,765 


Equity: 


Contributed capital 


15,208 


15,208 




Revaluation of property 


56,063 


56,063 




Retained earnings 


81,764 


65,103 




Total Equity 


153,035 


136,374 


• 


Total 


$247,366 


$248,139 


The accompanying notes are an integral part of this statement. 



12 



statement 
of Income 
and Retained 
Earnings 

Years ended June 30, 
1988 and 1987 
(In thousands) 







1988 


1987 


Operating revenues: 


Property rentals — commercial 


$17,358 


$16,607 




Property rentals — maritime 


4,507 


4,929 




Wharfage, dockage, and demurrage 


6,264 


5,670 




Commercial power 


1,023 


923 




Other 


593 


1,328 




Total Operating Revenues 


29,745 


29,457 


Operating expenses: 


Operations 


10,239 


1 1 ,030 




Maintenance 


9,806 


10,472 




Depreciation 


3,829 


4,129 




Commercial power 


813 


733 




Fire boat operations 


904 


920 




Total Operating Expenses 


25,591 


27,284 


Operating Income 




4,154 


2,173 


Othpr inrnmp 

Iwl II Iwwl 1 1^ 








(Expense): 


Lease termination revenue 


12,422 






Gain on sale of property, plant and equipment 


355 






Interest income 


2,863 


3,025 




Interest expense 


( 3,133) 


( 2,892) 




Total Other Income (Expense) 


12,507 


133 


Net inconne 




16,661 


2,306 


Retained earnings — 


Beginning of year 


65,103 


62,797 


Retained earnings — 


End of year 


$81,764 


$65,103 


The accompannying notes are an integral part of this statement. 



13 



statement 
of Changes > 
in Financial 
Position 

Years ended June 30, 
1988 and 1987 
(In thousands) 







1988 


1987 


Sources of funds: 


Operations: 








Net Income 


$16,661 


$2,306 




Expenses not using working capital — 
depreciation and amortization 


3,932 


4,231 




Revenue not providing working capital — 
Recognition of deferred revenue 


( 57) 


( 335) 




Lease termination revenue 


( 12.422) 






Gain on sale of property, plant and equipment 


( 355) 






Total From Operations 


7,759 


6,202 




Lease termination — value of property received 


4,100 






Proceeds from sale of property plant and 
equipment 


476 






Decrease in restricted assets 


8,392 


10,132 




Increase in liabilities payable from restricted assets 


272 


143 




Total 


20,999 


16,477 


Uses of funds: 


Acquisition of property plant, and equipment 


12,265 


13,067 




Reduction of noncurrent bonded debt 


3,700 


3,635 




Additional long-term receivable 


39 


31 




Total 


16,004 


16,733 




Increase (Decrease) in working capital 


$ 4,995 


($ 256) 


Working capital 
increase (decrease) 
by component: 


Cash 

Accounts receivable 
Accrued interest receivable 


($ 497) 
( 3) 
( 25) 


$2,972 
( 219) 
( 755) 




Materials and supplies 


228 


71 




Prepaid insurance and other assets 


( 437) 


23 




Accounts payable and accrued liabilities 


( 5,772) 


( 2,253) 




Current maturities of bonded debt 


( 65) 


( 115) 




Accrued bond interest payable 


22 


20 




Increase (Decrease) in working capital 


$ 4,995 


($ 256) 



The accompanying notes are an integral part of this statement. 




14 



Notes to 

Financial 

Statements 



Notel. 
Significant 
accounting policies 



Organization: The Port of San Francisco ("Port") is an enterprise fund of the 
City and County of San Francisco ("City"). A five-nnennber Port Commission is 
responsible for its operation, development, and maintenance. Commission 
members are appointed by the City's Mayor for terms of four years. The Port is 
an integral part of the City and the accompanying financial statements are 
included as a component of the City's Comprehensive Annual Financial Report. 

Prior to February 1969, the Port was owned by the State of California ("State") 
and administered by the San Francisco Port Authority, a State agency In 
February 1969, the Port was transferred in trust to the City under the terms and 
conditions specified in the State statutes of 1968, Chapter 1333 ("Burton Act"), 
as amended, and ratified by the City's voters in November 1968. 

Under the terms of the Burton Act, the State Legislature reserved the right to 
amend, modify, or revoke, in whole or in part, the transfer of lands in trust, 
provided that the State would then assume all lawful obligations related to such 
lands. 

Materials and Supplies: Materials and supplies ^re used for construction and 
maintenance of Port facilities and are stated at cost (approximates first-in, 
first-out method). 

Property, Plant and Equipment: Land transferred to the City in February 
1969 is stated at an amount which includes an increase over historical cost of 
$56,063,000. This amount was recorded by the State in prior years to reflect 
appraised values in 1929. The Port's management estimates that the fair market 
value of such land significantly exceeded recorded amounts at the time of the 
transfer. 

Other property, plant and equipment is carried at cost or at fair market value at 
the date received in the case of property received by donation or by termination 
of the lease. 

Depreciation is computed by use of the straight-line method over the estimated 
useful lives of the assets. Land improvements (principally pavement and 
railroad tracks) with a cost of approximately $18,000,000 are not depreciated 
because, in the opinion of management, the assets will be maintained to 
provide indefinite useful lives. Maintenance and repairs are expensed as 
incurred. 

Interest paid on bond funds used for construction purposes, less interest 
earned on the temporary investment of the proceeds of such borrowings is 
capitalized from the date of borrowing through the construction period. 



Note 2. The Port maintains its cash and investments and a portion of its restricted asset 

Cash and cash and investments as part of the City's pool of cash and investments The 

investments City's pool is invested pursuant to investment policy guidelines established by 

the City Treasurer The objectives of the policy are, in order of priority preserva- 
tion of capital, liquidity and yield. The policy addresses soundness of financial 
institutions in which the City will deposit funds, types of investment instruments 
as permitted by the California Government Code, and the percentage of the 
portfolio which may be invested in certain instruments with longer terms to 
maturity In addition, a City ordinance prohibits deposits and investments with 
financial institutions having specified relations with either the government of 
South Africa or certain private entities doing business with or m South Africa 
The Comprehensive Annual Financial Report of the City categorizes the level of 
risk associated with the City's pooled cash and investments 



15 



Notes to 

Financial 

Statements 

(continued) 



Note 2. 
Cash and 
investments 

(continued) 



At June 30, 1988 and 1987, cash and investments held by trustees includes the 
following: 

1988 (In thousands) 1987 



U.S. Agency Instrunnents 


$9,840 


$9,762 


Certificates of Deposit 




6 




$9,840 


$9,768 



The cost approxknates nnarket value and the investments generally mature 
within one year U.S. Agency instruments are held by a broker or dealer, or by 
its trust department or agent, but not in the Port's name. 



Note 3. At June 30, 1988 and 1987, property, plant and equipment consisted of: 

Property, plant. Estimated 
and equipment 1988 1987 Useful Life 

(In thousands) (Years) 



Land and land improvements 


$112,904 


$115,804 




Buildings, structures and related 
improvements 


144,732 


131,819 


5-60 


Equipment 


4,450 


4,759 


5-40 


Total 


262,086 


252,382 




Less accumulated depreciation 


(88,656) 


(85,319) 




Net 


173,430 


167.063 




Construction work in progress 


15,534 


13,587 




Total 


$188,964 


$180,650 





Total interest cost was $6,678,000 and $6,854,000 for fiscal years 1988 and 
1987, of which $3,545,000 and $3,962,000 was capitalized, respectively Total 
interest earned was $4,669,000 and $6,018,000 for fiscal years 1988 and 1987, 
of which $1 ,806,000 and $2,993,000 was capitalized, respectively 

The cost of fully depreciated assets still in use was approximately $51 ,800,000 
and $48,000,000 at June 30, 1988 and 1987, respectively 



Note 4. In fiscal 1983 the Port had the opportunity to purchase land, drydocks and 

Deferred revenue: cranes for $14 million, under a right of first refusal option. In lieu of the 

acquisition, an agreement was made between the seller, the Port and a third 
party whereby the Port acquired the land for $1 subject to a thirty-year lease 
with the third party In fiscal 1988, the Port and the tenant entered into a lease 
termination agreement. In consideration for the lease termination, the Port 
received the drydocks and cranes. 

Of the $14,000,000 total property value received, $9,900,000 was recorded 
previously as deferred revenue, and was being recognized as rental revenue 
over the lease term. The balance of $4,100,000, together with the unamortized 
deferred revenue of $8,322,000, has been recognized as lease termination 
revenue in the accompanying statement of income and retained earnings in 
1988. 



16 



Notes to 

Financial 

Statements 

(continued) 



Note 5. 
Bonded debt 



At June 30, 1988 and 1987, bonded debt consisted of: 

Fiscal 





Interest Year Last 
Rate Series 
(%) Matures 


1988 1987 
(In thousands) 


General Obligation Bonds: 

State of California: 
Third Seawall 1913 


4.0 1989 


$105 


$240 


Fifth Seawall 1958. Senes 
B, F, G, and H 


3.25-4.70 1999 


10,440 


12,075 


City and County of San 
Francisco — Harbor 
Improvement 1971 : 
Series A 


4.5-5.25 2003 


12,000 


12,800 


Series B 


6.0-6.3 2005 


6,800 


7,200 


Total General Obligation 
Bonds 




29,345 


32,315 


Revenue Bonds: 

Series A 1969 


7 "7 o 1 nno 

f.u—f.d lyyy 


8,600 


8,900 


Senes B 1971 


o.do-b.b iiUUl 


6,525 


6,800 


Series C 1984 


y.D— 11.0 dUuk) 


42,410 


42,500 


Total Revenue Bonds 




57,535 


58,200 


Total Bonded Debt 




86,880 


90,515 


Less: 








Current maturities 




3,700 


3,635 


Unamortized discount — 
Revenue Bond Series C 




1,546 


1,648 


Total Long-Term Bonded Debt 




$81,634 


$85,232 


The bonds mature as follows: 








Year Ending 

June 30 State of 
(In thousands) California 


City and 
County of 
San Francisco 


Revenue 
Bonds 


Total 


1989 $ 1,740 


$ 1,200 


$ 760 


$ 3,700 


1990 1,635 


1,200 


880 


3.715 


1991 i.UbU 


1 xUv 


1,065 


3.325 


1992 1,055 


1,200 


1.505 


3,760 


1993 1,055 


1,200 


1,595 


3,850 


Thereafter 4,000 


12.800 


51.730 


68.530 


Total $10,545 


$18,800 


$57,535 


$86,880 



The revenue bonds are collateralized by the net revenues ot the Port, as defined 
by the bond resolution, are subordinated to the general obligation bonds of 
the State, and are on a parity with any future revenue bonds The general 
obligation bonds issued by the City are subordinated to the revenue bonds 
and any future revenue bonds 



17 



Notes to 

Financial 

Statements 

(continued) 



Note 6. 
Operating 
Revenues — 
Property rentals 



The revenue bonds require that net revenues of the Port, as defined, be at least 
1 .3 times the debt service requirements of such bonds for the following twelve 
months. Certain bond resolutions require that the Port maintain funds for the 
purpose of accumulating assets which are restricted to interest and principal 
payments. Such resolutions prescribe the amounts to be accumulated and the 
types of securities in which the restricted assets may be invested, as discussed 
in Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds may be 
used for reconstruction of the property or for construction of related property If 
the proceeds are not used for those purposes, they must be applied to the 
redemption of bonds as provided in Article III, Port Commission Resolution 
Number 5231 . At June 30, 1988 and 1987, restricted capital outlay funds 
included unexpended fire insurance proceeds of $2,153,000 and $2,203,000, 
respectively 

The Port leases property and facilities to others. These leases provide for 30- 
day cancellation or for retention of ownership by the Port at the termination 
of the agreement. Accordingly all leases are accounted for as operating leases. 

Certain of the Port's property rental agreements specify rental payments based 
on a percentage of tenant sales, subject to a minimum amount. Property rental 
revenues were comprised as follows: 





1988 


(In thousands) 1987 


Minimum rentals 


$17,660 


$17,766 


Percentage rentals 


4,205 


3,770 




$21,865 


$21 ,536 



Minimum future rental income under noncancellable operating leases having 
terms in excess of one year are as follows: 

Year ending June 30: 
(In thousands) 

1989 $ 7,948 

1990 7,552 

1991 7,420 

1992 7,055 

1993 6,167 
Thereafter 178,042 



Total 



$214,184 



The approximate cost of property subject to operating leases and property 
held for lease at June 30, 1988 consisted of: 

Land and land improvements $ 47,000 

Buildings, structures, and related improvements (at cost, less 

accumulated depreciation of $80,000) 56,000 

Total $103,000 



18 



Notes to 

Financial 

Statements 

(continued) 



Note 7. 

Employee benefit 
plans 



Retirement Plan: The City has a defined benefit retirement plan (the Plan) 
which is administered by the San Francisco City and County Employees' 
Retirement System (Retirement System). The Plan covers the majority of full- 
time employees of the Port along with other employees of the City The Plan 
provides retirement, death and disability benefits. Benefits are based on 
specified percentages of average final compensation and length of service, 
with annual cost-of-living adjustments after retirement. 

The Plan is financed primarily by: (a) contributions from the City which include 
contributions from the Port; (b) employee contributions; and (c) income from 
investments. Pension expenditures of the City, including that of the Port, are 
based on rates set by the Retirement Board of the Retirement System. Annual 
contributions to the Plan are equal to amounts accrued for pension expense 
and include amortization of past service costs through June 30, 2000. The City 
determines contributions due from each fund based on employer payroll. 
Pension costs relating to the Port were $1 ,310,000 and $1 ,190,000 for 1988 and 
1987, respectively The City met the actuarily determined contribution require- 
ments for the years ended June 30, 1988 and 1987. 

The latest actuarial valuation of the Retirement System was completed in 
February 1988 and was based upon employee data and asset information as 
of June 30, 1987, The significant economic assumptions used in this valuation 
were an annual return on investments of 8%, an annual increase in wages 
attributable to inflation of 6.5%, annual consumer price index increases of 5% 
and an expected future growth in the number of employees of 0%. 

The following information is presented as a result of this valuation as of June 
30, 1987 and includes substantially all City fund groups: 

(In Millions) 



Pension benefit obligation 

Net assets available for benefits at cost (market value $3,327) 



$4,244 
3.221 



Unfunded pension benefit obligation 



$1,023 



The amount of assets and obligations for the Port employees is not separable 
from the total City plan. Detail of the total plan assets and obligations are 
reported in the City's Comprehensive Annual Financial Report. 

Certain employees who commenced their employment at the Port prior to 
February 1969, participate in the State of California Public Employees Retire- 
ment System (PERS). Contributions to PERS totalled approximately $130,000 
and $184,000 for 1988 and 1987, respectively 

Prior to 1987, the Port was obligated to annually contribute $169,000 until 
July 1 , 1989 to PERS for settlement of an unfunded liability In 1987. the Port 
suspended payments based on advice of the PERS' actuaries. The remaining 
unfunded liability approximately $650,000, is expected to be eliminated as a 
result of actuarial gains. 

Deferred Compensation Plan: The City offers its employees a deterred com- 
pensation plan created in accordance with Internal Revenue Code Section 
457. The plan, available to all Port employees, permits them to defer a portion 
of their salary until future years. 

The amount of assets and related participant obligations for Port employees is 
not separable from the total City plan. The total plan assets and obligations 
are accounted for in an agency fund of the City and are included in the City's 
Comprehensive Annual Financial Report. 

Health Care Benefits— Retired Employees: The Port provides health care 
benefits for retired employees. Substantially all of the employees may become 
eligible for these benefits if they reach normal retirement age Those benefits, 
and similar benefits for active employees, are provided through the City's 
Health Care System. The Port recognizes the cost of providing the benefits 
by expensing the annual insurance premiums, which were approximately 
$258,000 and $210,000 for the years ended June 30. 1988 and 1987. respec- 
tively The cost of providing benefits for the retirees is not separable from the 
cost of providing benefits for the active employees 



19 



Notes to 

Financial 

Statements 

(continued) 



Note 8. 
Related party 
transactions 



The Port receives services from various City departments. The cost of these 
services, included as operating expenses in the financial statements, was 
approximately $2,700,000 in 1988 and $2,400,000 in 1987. 

Included in accounts payable and accrued liabilities are amounts due to City 
departments of approximately $197,000 and $2,441 ,000 at June 30, 1988 and 
1987, respectively 



Note 9. 

Commitments 
and contingent 
liabilities 



The Port is presently planning various development projects which involve a 
commitment to expend significant capital funds. The Port had firm purchase 
commitments at June 30, 1988 for approximately $3,346,000 for construction, 
material and services. 

Under a management advisory contract signed in December 1973, the Port 
transferred its railroad operations to Port Railroad, Inc. for a period of twenty 
years. The contract is cancellable by Port Railroad, Inc. with nine months' 
written notice. 

The Port is a defendant in various lawsuits; most deal with personal injury or 
property damage resulting from accident or fire and are covered by insurance. 
In the opinion of counsel the likelihood of an unfavorable outcome is probable 
in some of the suits and, accordingly accrued liabilities include the aggregate 
amount of deductibles under applicable insurance policies. However, a sub- 
stantial number of the lawsuits are in the discovery stages and counsel to 
the Port cannot express an opinion as to the possible outcome of such litigation. 
The ultimate resolution of such matters is not expected to have a material 
effect on the Port's financial position or results of operations. 



20 



1 



If you wish your name to be added 
to our mailing list, please contact: 

The Port of San Francisco 

Ferry Building 

San Francisco, CA 94TI1 

(415) 391-8000 
Fax: (415) 398-1269 
Telex: 275940 PSF UR 
Cable: SFPORTCOMM 

Michael P Huerta, Executive Director 
Ronald L. Stone, Director, Maritime 
Affairs 

John F Conrad, Director, Property and 
Finance 

Arthur M. Osborne, Director, 
Engineering and Maintenance 

Port Commissioners: 
AnneW. Halsted, President 
James R. Herman, Vice President 
Dr Arthur H. Coleman 
James Bouskos 
Douglas F Wong 

Agency Representation: 
JAPAN 

Japan Representative 

Office of the Port of San Francisco 

Takikawa Building, 7th Floor 

1-49 Ohkubo 1-Chome, Shinjuku-Ku 

Tokyo 160, Japan 

Telephone: 03-200-9117 or 9309 

Telex: USA 7608202 BRCTYO UC 

Fax: 03-200-6807 

TAIWAN 

Grand Vforld Shipping 
Agencies Ltd. 

Asia Enterprise Center 
60 Minchuan East Road 
Taipei, Taiwan 
Telephone: (02) 7169555 
Telex: 13072 GRANAGEN 

LATIN AMERICA 
Carlos A. Massera 

Republica do Peru 124, #401 

Copacabana 

Rio de Janeiro, Brazil 

Telephone (55) (021 ) 257-0232 

U.S. MIDWEST 
Trade Reps Ltd. 

9420 W. Foster Avenue, Suite L-2 
Chicago, IL 60656 
(312) 992-0709, Telex: 910 2530336 
Fax: (312) 992-1225 

Wharfside is published bi-monthly 
by the Port of San Francisco 

Editor: Nancy F Pitt 

Design: Williams & Ziller Design 

Photographs: 

Air News Photos ^ 

Steve Proehl 

CH2M Hill 



W H A 



R 



S 



5^ 




1989 Annual Report 
The Port Of 
San Francisco 



^^^^ 



Aho\i\ 150 years ago, the Gold Rush of California brought people 
from all over the world to our shores and established San Fran- 
cisco as a premiere seaport. As we enter the decade of the 1990s, 
San Francisco emerges as the centerpiece of the fourth largest metropoli- 
tan area in the country, maintaining our role as a 
crucial gateway to America, the Far East, and the 
rest of the world. 

The Port of San Francisco is 127 years old. It continues to protect seven and a 
half miles of the world's most desirable waterfront, furthering its man- 
date to promote "commerce, navigation and fisheries," and encouraging 

public access and waterfront recreation — all the while maintaining its 

I I 

self-sustaining status with no dependence on 
local tax monies. 

1989. The Port of San Francisco kept pace with the 
global marketplace by instituting intermodal im 






pro.emems for efficient HanMin, ofMernanonal 
cargo. Gate and terminal im- W'^f^j/^\^^ provements were 
made at the Port's North and South Container facilities. Plans to 
provide double-stack rail access direct to America's heartland are well 
underway. The Port welcomed two new shipping lines, bringing the total 
number of lines calling at the Port of San Francisco to twenty-six. 



(Introduction Cont.) 

The fisherman's Wharf Seafood Center, designed to create a whole new harbor 
for commercial fishing fleets with a seafood institute and fish processing 
center, obtained significant funding from State agencies. A new passen- 
ger ferry terminal was built overnight to accommodate the six-fold in- 
crease in ferry traffic resulting from the October earthquake 



closure of the Bay Bridge. 



Oct. 17, 1989: The Worst Brings Out The Best. 



Two old pier sites— Pier 7 and Piers 24 and 26 — began their transforma- 
tion from condemned, obsolete structures to vital and open public access 
resources. The Port began a long-term Strategic Plan with a statement of 
mission, goals and objectives due in early 1990. Also instituted were a 
cost-accounting system (revenue and expenditures by facility), capital 
plan (priority and funding list of capital improvement and facilities 
maintenance projects) and deferred maintenance schedule. 
1989 will be remembered for the second worst earthquake in California's history. 
Without question, the quake resulted in millions in unforeseen costs but 
despite the obstacles, the Port was able to meet its J,pcal and 

global mandate. I' 

I 'J. 

1989 was a truly vital year. We begin the new decade with a 
standing commitment to provide all Port users with 
dedicated service. 



The Port welcomed 
Us second fire boat 
after tlie first fire 
boat dramatically 
proved its worth 
during the October 
earthquake. 






Commission President's Report: Anne Halsted. 




Anne W. Hoisted 
President 



James R. Herman 
Vice-President 



At the conclusion of 1989, the Port of San Francisco finds itself with the founda- 
tion in place for improvement, growth and development of its facilities 
in the future. 

Significantly for our maritime business, our progress towards rebuilding local 
railroad tunnels to accommodate double stacked containers is substantial. 
This major improvement in service capacity will greatly enhance our value 
to our customers. Another milestone accomplished during 1989 was the 
general agreement reached with the Mission Bay Project to swap land at 
China Basin for land adjacent to Pier 80, thus creating much enlarged 
space for future development of our maritime terminals. 
Another major step taken towards a stronger future was the commissioning of our 
strategic plan, a project which we believe will bring the Port's role and 
objectives into focus for the 21st century. That project should be completed 
in the first half of 1990 and serve as the basis for planning the right balance 
of investment of resources in the future. 
1989 was filled with all the regular business activities which 
„ v^^^^ one would normally expect and more. The Port joined 
^^^^^ Mayor Art Agnos and Mayor Tom McEnery of San Jose on 
a very fruitful economic development mission to Asia, promoting the 
regional benefits of the Bay Area. In other regional efforts, we joined the 
Port of Oakland in working towards resolution of the dredging issue. ^I^., 
The earthquake of October 17, 1989, took a severe toll on Port facilities, particu- 
larly those at Pier 45 used for commercial fish processing. We are hopeful 
that the damages will be corrected soon. The opportunity created by the 
earthquake was the need for greatly en- 
hanced ferry service— a feat that was put 
together by Port staff working with the 
ferry operators and Caltrans with incredible 
speed and efficiency. 

/ must give credit for the accomplishments of 1989 
to Michael Huerta, who started with us in January. His 
leadership, as well as that of all the staff, is making the 
difference which will give the Port of San Francisco 
greater strength in the years to come. 



Dr. Arthur H. Coleman 




James Bouskos 




Douglas f. Wong 



6 



Executive Director's Report. 



1989 will definitely go down in history as one of the truly remarkable years in modern times. 

In country after country, we saw dramatic political and economic changes. Few 
people thought the Berlin Wall would be effectively eliminated in their lifetime, 
but within a few short days and weeks, it was but a distant memory. 
The changes in Europe are a signal to all of us involved in trade that the 1990s will 
see different trading relationships develop. Until recently, Europe was seen as a 
relatively mature market where U.S. trade was concerned. However, the vast 
potential market in the Soviet Union and Eastern Europe now holds out the 
prospect of a new round of trade growth. If we can use the opening of the new 
McDonald's Restaurant in Moscow as a barometer, we can see that the poten- 
tial is enormous. 

We in California have tended to focus our attention on the Far East rather than 
Europe. Now is a good time to think of looking the other way. This is not to say 
that we should abandon our well-developed relationships with Asia. Instead, 
we should begin to adapt a truly global perspective. 
Closer to home, we saw our own share of upheaval of a more down to earth, or 
earth related, variety. The earthquake of October 17 was clearly the big story of 
the year. One cannot understate the tragedy of it, but San Franciscans and 
everyone in the Bay Area showed the world that we can adapt and move on. 
The next decade will be an exdtiag time. We expect to see tonnage through the Port 
increase dramatically. We will make major new investments in our marine 
terminals to keep them in line with the latest technology. 
We also expect to start construction this year of our long awaited 
Seafood Center project at Fisherman's Wharf. Our new public 
access pier is taking shape at Pier 7. We have started negotiat- 
ing a development memorandum for Piers 24 and 26. Hie 
sailing center to be constructed there will open up a stretch of 
waterfront that has long been closed off. 

Consistent with the Port's global perspective, during the past year we've also * 
looked across the San Francisco Bay to strengthen our working relation-^ 
ship with all other ports in the region. We all share the same universe of issues 
and problems. Meetings were held between our Commissioners and staffs to 
explore matters of common interest. ^ x, 
/ appreciate the support you in our community have shown for the Port over the 
last year. And I enjoyed getting to know you and hearing your concerns about 
the waterfront. I look forward to the 1990s as a time when we can all work 
together toward making the Port more responsive to all of our needs. 




Michael P. Huerto 
Exetutive Director 





Executive Staff: 

Mkhael Janis, lydia O'Skea, 

Bbabeth Day, Michael Hueria 



4 





Michael Janis 
Executive Assistant 




North & South Container Terminals 
Piers 80 & 94-96 



The Port of San Francisco's 



Diverse Water Front. 




Newsprint Terminal 
Piers 27, 29 & 48 



Ship Repair 

Piers 50, 54, 38 & 40 



8 



"We in San Francisco are blessed 
with a natural deep water port and 
a thriving population base — 
attributes that are very desirable 
to our shipping clients. " 

•Commissioner iames Bouskos 



"The economic contribution of 
the Port to San Francisco 
cannot be understated... we also 
feel a strong responsibility 
to port tenants. " 

-Commissioner Arthur Coleman 



"I am concerned with the total 
development of the Port ... the 
promotion of international trade 
as well as an equitable balance 
of our commercial industry. " 

-Commissioner Douglas F. Wong 





fish Handling 
Pier 45 




Foreign Trade Zone 
Piers 19-23 




Fisherman's Wharf 



Cruise Terminal 
Pier 35 



i blic Access 
I aterfront Promenade 
n7& 24/26 



1 A 






m 

llhlilliiil 



Cotton Warehouse 
Piers 15-17 



Port Headquarters 
Ferry Terminal 



9 



Financial Highlights. 




n fiscal year 1988/89, the Port of San Francisco's operating revenues were 
$30,532,000, resulting in a slight increase over 1987/88. This, together with a 
slight decrease in expenses, gave the Port an operating income of $5,161,000, 
an increase of $1,007,000 over 1987/88. Usually net income is the figure used 
to compare the current year with the previous years and to assess how the Port 
fared. However, in 1987/88, net income included property assets acquired by 
the Todd Shipyard lease termination. Given this unusual event, operating 
income gives a clearer picture of available income and provides a more valid 
basis for comparison. 

A significant point to note is this year's net income figure of $2,995,000 included 
$888,000 of "Other Expense" which was the Port's share of a 1989 settlement 
on a suit against the City and County of San Francisco for salary rate adjust- 
ments. As a result of the settlement, the Port will make retroactive salary 
payments of $888,000 to those employees affected over a two year period. 
Of the Port's approximately $30.5 million in operating revenues, over 60 percent 
($18,836,000) were derived from property and commercial ventures. 
Maritime operations contributed 35 percent ($10,799,000) to the Port's 
operating revenues. 

1989 also saw the development of the Facility Cost Accounting System (FCAS) 
which documents actual revenues and expenses according to facility. This 
information will assist Port Commissioners and staff in decisions affecting 
maximization of profits and allocation of resources. The user analy- 
sis and conceptual design phases of FCAS have been completed with 
direct and indirect revenues subsystems implemented in July 1989, 
and direct expenditures input as of October 1989. The Port relied 
almost entirely on its own staff to develop and install the Facility 
Cost Accounting System. 



Cargo Operations. 



Transpacific trade was again preeminent in the Port's cargo mix, with Far East and 
Southeast Asian services providing fully two thirds of the general cargo. As 
a result of service realignment by key shipping lines, particularly the dis- 
continuation of Japan Line's Pacific operations, tonnage in the Asian trades 
declined 13 percent. On the positive side, container tonnage by China 
Ocean Shipping tripled over the previous year and expected continued 
growth by Evergreen, the Port's largest client, promises to restore this 
trade to its full strength and beyond during the current fiscal year. 
Despite the Port's first Transpacific decline in well over a decade, total 
general cargo and total container cargo dropped by only 1 percent, owing 
to impressive increases in other trades. 




10 



Cargo Operations. 



San Francisco remained the premiere coffee port of the Western United States. 

Two new lines, Norsul and Ciamar, selected San Francisco as their Northern 
California port-of-call during the year. Central and South American cargo grew 
37 percent in San Francisco resulting in the Port capturing a dominant 74 
percent share of the Bay Area's Latin American cargoes. 
Unprecedented gains were also registered in the Australia/New Zealand trade 
route. Columbus and Nedlloyd sustained impressive cargo growth while ACT- 
Pace and Blue Star Line completed their first full year of operation at the Port. 
As a result, San Francisco's share of the Bay Area's Australia/New Zealand 
market leaped fi^om 19 to 36 percent. 

Total tonnage in FY 88/89, including containers, breakbulk and bulk cargo, again 
exceeded 3.1 million tons — a level attained the prior fiscal year for the first time 
since the early 1970s. 



Container Terminal Improvements, 



The Port is nearing completion of major infrastructure improvements for both our 
North and South Container Terminals. 

Gate improvements — expansion of entry lanes fi"om three to eight, 
expansion of exit lanes from two to four, and electronically served clerking 
booth for every two lanes — ^will elevate the Port of San Francisco system to one 
of the West Coast's most automated and efficient. 

Vehicles will be identified upon arrival through television cameras and intercom, 
saving truck drivers time and effort. Pre-entered data will automatically be 
processed via central computer with all necessary paperwork printed in the 
clerk's booth. This central computer will be connected with shipping compa 
nies to speed information processing. 

In addition, all above ground utilities at the South Container Terminal have bee 
removed and placed underground for smoother traffic flow. 
The South Container Terminal was further strengthened with the 
placement of a gabion wall which replaced some fill material 
that was washed into the Bay. The "leaching" of the fill mate- 
rial from the landfill portion of the pier resulted in voids under 
neath and holes in the above pavement. The new gabion wall provides a secure 
foundation for the heavy container loads above ground. 



Tunnel Modification Project. 



The Port of San Francisco, which built California's first on-dock Intermodal Con- 
tainer Transfer Facility in 1986, is concluding negotiations with Southern 
Pacific Transportation Company to modify two old rail tunnels in San Francisco 
for clearance of double-stack high cube containers. Upon construction comple 
tion, the multi-million capital improvement project will provide unrestricted 
cargo access, from ship direct to rail and straight from the Port on a single line 
haul through America's central rail corridor. 



13 



Cruise Industry. 





Over half of today's West Coast cargo pool is destined for, or originates 
from, the larger markets east of the Rockies. The recent merger 
of the Southern Pacific Railway with Denver & Rio Grande 
Western created a unified and competitive rail system that better 
links Northern California - the strongest export oriented econ- 
omy and home to the fourth largest metropolitan area in the 
country - with the vital Midwest "bread basket." Completion of 
the tunnel modification project — one of the last pieces needed in 
the Port's modem intermodal infrastructure — levels the playing field for compe- 
tition against the Pacific Northwest and Southern California ports for the bur- 
geoning intermodal market. 



The formation in the prior year of a Cruise Industry Task Force yielded a marketing plan 
to increase passenger shipping demand for San Francisco. In 1989, the Port 
worked with cruise ship operators towards developing terminal and infrastruc- 
ture support facilities needed to meet the City's current and future cruise 
requirements. A study was completed and will shortly be released on the 
adequacy of Pier 35, the present Passenger Terminal in the Fisherman's Wharf 
area and other possible locations. 

In the past year, San Francisco played host to the christening of two of the most 
luxurious passenger vessels in the water — the Royal Viking Sun and Seaboum 
Pride. In addition, Princess Cruise Line homeported their newest "Loveboat", 
the M.V. Star Princess, in San Francisco for popular Alaskan 
itineraries. The first Japanese cruise ship to ply West Coast waters in many 
years called San Francisco Bay in 1989 when Mitsui OSK Lines M.V. Fuji Maru 
arrived for an extended stay at Pier 35. 

San Francisco's position as the "Golden Gateway to a Grand 
.iiiUfilMI i Cruise" will be reaffirmed this summer when Crystal Cruise 

Line, owned by Japanese shipping giant Nippon Yusen Kaisha, 
homeports its M.V. Crystal Harmony in San Francisco for 
Alaskan tours. 




Pier 7: Public Access And Fishing Pier. 



The second oldest structure on San Francisco's waterfront was given a new lease on 
life in 1989 when construction began for a public access and fishing pier at Pier 
7. A groundbreaking ceremony — led by San Francisco Mayor Art Agnos and 
attended by Port Commissioners, Recreation and Park officials, and state and 
local dignitaries — launched the construction of the $6.5 million recreation pier 
that's expected to open by the fall of 1990. 

The new pier will have timber plank decking, ornamental iron handrails, benches, 
small balconies and old-style Embarcadero light fixtures. Upon completion. Pier 
7 will be the longest pier extending into the Bay and boast one of the most re- 
markable views of San Francisco's skyline. 



14 



Pier 24-26: The San Francisco Sailing Center. 



What began in January 1989 as a Request For Proposals by the 
Port for an "International Maritime and Yachting Center", culminated in the 
selection of the KoU and Bressie Companies for a San Francisco Sailing Center, an 
expanded yacht harbor with strong sailing program supported by a 170-room 
hotel. A Development Memorandum is under negotiation that will chart the 
regulatory and environmental process, and detail the design and financial arrange- 
ments. By removing an obsolete pier site and replacing it with a vital, world-class 
sailing center, the Port will provide San Franciscans with an exciting public access 
resource for future generations to enjoy. 




Fisherman's Wharf Seafood Center. 



A major legislative effort was launched in 1989 when San Francisco Mayor Art Agnos and 
Executive Director Michael Huerta hosted a "Fisherman's Wharf' style luncheon 
with key legislators in an effort to revitalize the state's commercial fishing 
harbors. The focus of our legislative initiative was to secure funding for San 
Francisco's Seafood Center, a $23 million project that includes construction of 
new fishing berths and a state-of-the-art fish handling, processing and research 
center. Through the efforts of California Assembly Speaker Willie Brown, 
Assemblyman John Burton and Senator Milton Marks, the Port received a 
$300,000 grant fi'om California State Coastal Conservancy Funds for construction 
of fishing berths, and received approval from the California Department of Boat- 
ing and Waterways for a $3 million loan. The environmental review process is 
under way and approval is expected in early 1990. 

The earthquake of October 17, 1989 caused over $12 million in damage to the fish 
handling facilities at Pier 45, and the Port successfully relocated impacted fisher- 
men. Sensing the need to quickly restore full fishing operations, the Port acceler- 
ated its design and construction schedule for structural repairs to Pier 45. 



Passenger Ferry Service. 



The October earthquake, which resulted in the temporary closure of the Bay Bridge, 
forced commuters to find alternative transportation. The Port of San Francisco 
immediately took steps to create ferry terminals to accommodate the emergency 
ferry service that linked the entire Bay Area. A major ferry terminal was erected 
overnight at Pier 1 and included passenger queing areas, 
lights and signs, ticket booths, public phones and portable 
restrooms. Ferry ridership increased sbc-fold 
following the earthquake. 





15 



Environmental Safety. 




The Environmental Safety Group had a busy year keeping the Port free from potential 
toxic and hazardous waste problems and complying with new environmental 
and safety regulations. Major projects include environmental assessment of 
three old, inactive dumpsites that encroached into the Bay; removal of a leaking 
underground tank with cleanup program; development of a Material Safety Data 
Sheet-a computer program to track every material with toxic ingredients on 
Port property; training for all Port employees exposed to asbestos materials; and 
sampling of dredged mud to determine proper disposal. An on-going hazardous 
waste program is maintained to safely collect and store used products and toxic 
materials abandoned on Port properties. 



Credits. 



If you wish your name to be 
added to our mailing list, 
please contact: 

Wharfside 

The Port of San Francisco 

Ferry Building 

San Francisco, CA 94111 

(415) 274-0400 

FAX (415) 274-0528 

Telex 275940 PSS UR 

Port Commissioners: 

Anne W. Halsted, 
President 

James R. Herman, 

Vice-President 

Dr. Arthur H. Coleman 

James Bouskos 

Douglas F. Wong 

[xeative Director: 

Michael P. Huerta 

Editor: 

Wendy Ho Iwata 
Design: 

Yamaguma & Associates 

Photography: 

Dick Osbom 
Mark Snyder 
Sharon Beals 
Wendy Iwata 
Veronica Sanchez 

(ksisted by Government & Public Mails) 



Agency Representation: 
JAPAN 

Japan Representative Office 
of the Port of San Francisco 
Honcho 3.9.4 Building, 4th floor 
9-4 Nihonbashi Honcho 
3-Chrome, Chuo-Ku 
Tokyo 103, Japan 
Telephone 03-808-1804 
Telex: USA 7608202 BRCTYO UC 
FAX: 03-808-1800 

TAIWAN 

Grand World Shipping Agencies, Ltd. 

Asia Enterprise Center 

602 Minchuan East Road 

Taipei, Taiwan 

Telephone: (02) 7169555 

Telex: 13072 GRANAGEN 

US MIDWEST 

Trade Reps Ltd. 

9420 W. Foster Avenue, Suite 1^2 
Chicago, IL 60656 
Telex: 910 2530336 
.FAX: (312)992-1225 



Independent Auditors' Report. 



The Honorable Samuel D. Yockey, Controller, 
City and County of San Francisco 

We have audited the accompanying balance sheet of the PORl COMMISSION, CITY 
AND COUNH OF SAN FRANCISCO, PORT OF SAN FRANCISCO ("Port") as of June 30, 
1989 and 1988, and the related statements of income, equity, and changes in 
financial position for the years then ended. These financial statements are the 
responsibility of the Port's management. Our responsibility is to express an 
opinion on these financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit to 
obtain reasonable assurance about whether the financial statements are fi-ee of 
material misstatement. An audit includes examining, on a test basis, evidence 
supporting the amounts and disclosures in the financial statements. An audit 
also includes assessing the accounting principles used and significant esti- 
mates made by management, as well as evaluating the overall financial state- 
ment presentation. We believe that our audits provide a reasonable basis for 
our opinion. 

In our opinion, the financial statements referred to above present fairly, in all 
material respects, the financial position of the Port as of June 30, 1989 and 1988, 
and the results of its operations and changes in its financial position for the 
years then ended, in conformity with generally accepted accounting principles. 

Hood and Strong 



September 28, 1989 



Certified Public Accountants 



Morris-Davis & Company 




17 



June 30, 1989 and 1988 (In thousands) 



Assets -^^^^^^^^^^^^^^^^^M 


1989 


1988 


Current Assets 


r^QcK QnH invpQtmpntc; nrinrinflllv in C^itv Trpjl^lirv — 






Port operating fund 


$26,236 


$23,536 


Armiints; rprpivablp (less allowance for 






HniihHiil arrounts- 1989 - Sl81- 1988 - $307) 


2,514 


2.126 


Accrued interest receivable 


o/o 


OIL 


Matprials and sunnlies 


l.ilO 


1 01 A 

1,Z1U 


Prepaid insurance and other assets 




1,116 


Total Curfcnt Assets 


32,000 


28,856 


Restrkted Assets 






Cash and short-term investments: 






Capital outlay 


16,558 


17,981 


Bond interest and redemption 


9,934 


9,840 


l^CobCC ucpuoilo llClU 111 LI uai 


1.387 


1,340 


Total Restrkted Assets 


27,879 


29,161 


Property, Plant, and Equipment - Net 


187,349 


188,964 


Long Term Receivable 


436 


385 


Total Assets 


$247,664 


$247,366 




Liabilities and Equity 



Current Liabilities 

Accounts payable and accrued liabilities 
Accrued payroll and related costs 
Current maturities of bonded debt 
Accrued bond interest payable 



Total Current Uabilities 



Payable from Restricted Assets: 

Accrued bond interest payable 
Lessee deposits 

Total PayiMe From Restricted Assets 



Deferred Revenue , 
Bonded Debt - Less current maturities 
Total Uabilities 



$1,919 
2,829 
3.715 
214 

8,677 



2,522 
1.387 

3,909 



442 
78.021 
$91,049 



$2,463 
1,846 
3,700 
231 

8,240 



2,548 
1,340 

3,888 



569 
81.634 
$94,331 



Equity 

Contributed capital 
Revaluation of property 
Retained earnings 

Total Equity 



15,793 
56.063 
84,759 

156,615 



15,208 
56,063 
81,764 

153,035 



Total Liabltities and Equity 



$247,664 



$247,366 



The accompanying notes are an integral part of this statement. 



Statement Of Income 



Years EndedJime 30, 1989 and 1988 (In thousands) 



■■■■■■^H 1989 1988 
Operating Revenues: 

Property rentals - commercial $17,980 $17,358 

Property rentals - maritime 4,372 4,507 

Wharfage, dockage, and demurrage 6,427 6,264 

Commercial power 856 1,023 

Other 897 593 

Total Operating Revenues 30,532 29,745 



Operating Expenses 

Operations 9,538 10,239 

Maintenance 9,662 9,806 

Depreciation 4,530 3,829 

Commercial power 644 813 

Fire boat operations 997 904 



Total Operating Expenses 25,371 25,591 



Operating Income 5,161 4,154 



Other Income (Expense) 

Lease termination revenue 12,422 

Litigation settlement (888) 

Gain on sale of property, plant and equipment 29 355 

Interest income 2,983 2,863 

Interest expense (4,290) (3,133) 



Total Other Income (Expense) (2,166) 12,507 



Net Income $2,995 $16,661 



Years Ended June 30, 1989 and 1988 (In thousands) 



Contributed Revaluation Retained Total 

Capital of Property Earnings Equity 

Bahnces as of July 1, 1987 $15,208 $56,063 $65,103 $136,374 

Net income for the year 

ended June 30, 1988 16.661 16.661 



Balances as of June 30, 1988 15,208 56,063 81,764 153,035 

Capital Grants 585 585 

Net income for the year 

ended June 30, 1989 2,995 2.995 



Balances as of June 30, 1989 $15,793 $56,063 $84,759 $156,615 



The accompanying notes are an integral part of these statements. 



Statement Of Changes In Financial Position 



Years Ended June 30, 1989 and 1988 (In thousands) 





1989 


1988 


Sources Of Funds 






Operations: 






Net Income 




V J-U,U01 


Expenses not using working capital: 






Depreciation and amortization 


4.632 


3,932 


Revenue not providing working capital: 






Recognition of deferred revenue 


(127) 


(57) 


Lease termination revenue 




(12,422) 


Gain on sale of property, plant and 






equipment 


(29) 


(355) 


Total From Operations 


7,471 


7,759 


Lease termination - value of property received 




4,100 


Proceeds from sale of property, plant and 






equipment 


135 


476 


Decrease in restricted assets 


1,282 


8,392 


Increase in liabilities payable from 






restricted assets 


21 


272 


Capital grants received 






Total Sources Of Funds 


9,494 


20,999 


Uses Of Funds 






Acquisition of property, plant and equipment 


3,021 


12,265 


Payments and current maturities of bonded debt 


3,715 


3,700 


Additional long-term receivable 


51 


39 


Total Uses Of Funds 


6,787 


16,004 


Increase In Working Capital 


$2,707 


$4,995 


Working Capital Increase (Decrease) By Component 






Cash 


$2,700 


$(497) 


Accounts receivable 


ooo 


WJ 


Accrued interest receivable 


4 


(25) 


Materials and supplies 


inn 




Prepaid insurance and other assets 


(48) 


(437) 


Accounts payable and accrued liabilities 


544 


5,922 


Accrued payroll and related costs 


(983) 


(150) 


Current maturities of bonded debt 


(15) 


(65) 


Accrued bond interest payable 


17 


22 


Increase In Working Capital 


$2,707 


$4,995 




20 



Notes To Financial Statements. 



Note 1 - Significant Accounting Policies 



Organization 

The Port of San Francisco ("Port") is an enterprise fund of the City and County of San 
Francisco ("City"). A five-member Port Commission is responsible for its operation, develop- 
ment, and maintenance. Commission members are appointed by the City's Mayor for terms 
of four years. The Port is an integral part of the City, and the accompanying financial 
statements are included as a component of the City's Comprehensive Annual Financial 
Report. 

Prior to February 1969, the Port was owned by the State of California ("State") and adminis- 
tered by the San Francisco Port Authority, a State agency. In February 1969, the Port was 
transferred in trust to the City under the terms and conditions specified in the State statutes 
of 1968, Chapter 1333 ("Burton Act"), as amended, and ratified by the City's voters in 
November 1968. 

Under the terms of the Burton Act, the State Legislature reserved the right to amend, 
modify, or revoke, in whole or in part, the transfer of lands in trust, provided that the State 
would then assume all lawful obligations related to such lands. 

materials and Supplies 



Materials and supplies are used for construction and maintenance of Port facilities and are 
stated at cost, on a first-in, first-out basis. 

Property, Plant and Equipment 



Land transferred to the City in February 1969 is stated at an amount which includes an 
increase over historical cost of $56,063,000. This amount was recorded by the State in prior 
years to reflect appraised values in 1929. The Port's management estimates that the fair 
market value of such land significantiy exceeded recorded amounts at the time of the 
transfer. 

Other property, plant and equipment is carried at cost or at fair market value at the date 
received in the case of property received by donation or by termination of the lease. 

Depreciation is computed by use of the straight-line method over the estimated useful lives 
of the assets. Land improvements (principally pavement and railroad tracks) with a cost of 
approximately $18 million are not depreciated because, in the opinion of management, the 
assets will be maintained to provide indefinite useful lives. Maintenance and repairs are 
expensed as incurred. 

Interest paid on bond funds used for construction purposes, less interest earned on the 
temporary investment of the proceeds of such borrowings is capitalized fi-om the date of 
borrowing tiirough the construction period. 



Note 2 - Cash And Investments 



The Port maintains its cash and investments and a portion of its restricted asset cash and 
investments as part of the City's pool of cash and investments. The City's pool is invested 
pursuant to investment policy guidelines established by the City Treasurer. The objectives of 
the policy are, in order of priority, preservation of capital, liquidity, and yield. The policy 
addresses soundness of financial institutions in which the City will deposit funds, types of 
investment instruments as permitted by the California Government Code, and the percent- 
age of the portfolio which may be invested in certain instruments with longer terms to 
maturity. In addition, a City ordinance prohibits deposits and investments with financial 
institutions having specified relations with either the government of South Africa or certain 
private entities doing business with or in South Afiica. Tlie Comprehensive Annual iMnancial 

Continued On Page 22 




21 



Continued from previous page 

Report of the City categorizes the level of risk associated with the City's pooled cash and 
investments. 

At June 30, 1989 and 1988, cash and investments held by trustees include $9,934,000 and 
$9,840,000, respectively, invested in a U.S. Agency government fund. The cost approximates 
market value and the investments may be withdrawn on demand. 

At June 30, 1989 and 1988, lessee deposits held in trust include $536,000 and $461,000, 
respectively, invested in short-term, renewable certificates of deposit. The cost approximates 
market value and the deposits are insured and held by the Port in its own name. 



Note 3 - Property, Plant, and Equipment 



At June 30, 1989 and 1988, property, plant and equipment tonsisted ok 



1989 1988 Estimated 

Useful life 

(In thousands) (Years) 



Land and land improvements $112,904 $112,904 

Buildings, structures and related improvements 158,797 144,732 5 - 55 

Equipment 3,963 4,450 5-40 



Total 


275,664 


262,086 


Less accumulated depreciation 


(92,344) 


(88,656) 


Net 


183,320 


173,430 


Construction work in progress 


4,029 


15,534 


Total 


$187,349 


$188,964 



Total interest cost was $6,503,000 and $6,678,000 for fiscal years 1989 and 1988. of which 
$2,213,000 and $3,545,000 was capitalized, respectively. Total interest earned was $4,598,000 
and $4,669,000 for fiscal years 1989 and 1988, of which $1,615,000 and $1,806,000 was 
capitalized, respectively. 

The cost of fully depreciated assets still in use was approximately $52,900,000 and 
$51,800,000 at June 30, 1989 and 1988, respectively. 



Note 4 - Bonded Debt 



At June 30, 1989 and 1988, bonded debt consisted of: 



Fiscal 
Year Last 

Series 
matures 



1989 
1999 



General Obligation Bonds 

State of California: 
Third Seawall 1913 
Fifth Seawall 1958, 
Series B, F, G, and H 
City and County of 

San Francisco - Harbor 
Improvement 1971: 
Series A 
Series B 



Interest 
Rate 
(%) 



4.0 

1.00 - 4.85 



4.5-5.25 
6.0-6.3 



Btthnte 

1989 1988 
(In thousands) 



2003 
2005 



$8,805 



11,200 
6,400 



$105 
10,440 



12,000 
6,800 



Total General Obligation Bonds 



26,405 



29,345 



Continued On Page 23 



Revenue Bonds 1 


Interest 
Rate 
(%) 


Fiscal 
Year Last 
Series 
Matures 


Balance 

1989 1988 
(In thousands) 


Series A 1969 
Series B 1971 
Series C 1984 


7.0-7.2 
5.5 

9.5-11.5 


1999 
2001 
2009 


$8,200 
6 ^50 
42,325 


$8,600 
6,525 
42,410 


lolal Revenue Bonds 






56,775 


57,535 


Total Bonded Debt 






83,180 


86,880 


Less:- 

Current maturities 

Unamortized discount -Revenue Bond Series C 




3,715 
1,444 


3,700 
1,546 


Total Long-Term Bonded Debt 






$78,021 


$81,634 



The bonds mature as follom 







City and 






Year ending June 30 


State of 


County of 


Revenue 




(In thousands) 


California 


San Francisco 


Bonds 


Total 


1990 


$1,635 


$1,200 


$880 


$3,715 


1991 


1,060 


1,200 


1,065 


3,325 


1992 


1,055 


1,200 


1,505 


3,760 


1993 


1,055 


1,200 


1,595 


3,850 


1994 


1,055 


1,200 


1,755 


4,010 


Thereafter 


2.945 


11,600 


49,975 


64,520 


Total 


$8,805 


$17,600 


$56,775 


$83,180 



The revenue bonds are collateralized by the net revenues of the Port, as defined by the bond 
resolution, are subordinated to the general obligation bonds of the State, and are on a parity 
with any future revenue bonds. The general obligation bonds issued by the City are subordi- 
nated to the revenue bonds and any future revenue bonds. 

The revenue bonds require that net revenues of the Port, as defined, be at least 1.3 times the 
debt service requirements of such bonds for the following twelve months. Certain bond 
resolutions require that the Port maintain funds for the purpose of accumulating assets 
which are restricted to interest and principal payments. Such resolutions prescribe the 
amounts to be accumulated and the types of securities in which the restricted assets may be 
invested, as discussed in Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds may be used for 
reconstruction of the property or for construction of related property. If the proceeds are not 
used for those purposes, they must be applied to the redemption of bonds as provided in 
Article III, Port Commission Resolution Number 5231. At June 30, 1989 and 1988. restricted 
capital outlay funds included unexpended fire insurance proceeds of $1,451,000 
and $2,153,000, respectively. 



Note 5 - Operating Revenues - Property Rentals 



The Port leases property and facilities to others. These leases provide for 30-day cancellation 
or for retention of ownership by the Port at the termination of the agreement. Accordingly, 
all leases are accounted for as operating leases. 

Certain of the Port's properly rental agreements specify rental payments based on a percent- 
age of tenant sales, subject to a minimum amount. Properly rental revenues vi^ere comprised 
as follows: 

[W9 ]m 

(la thousands) 

Minimum rentals $18,114 $17,660 

Percentage rentals 4,238 4,205 

Total $22,352 $21,865 



Minimum future rental income under noncancellable operating leases having terms in 
excess of one year are as follows: 



Year ending June 30 




(In thousands) 




1990 


$8,630 


1991 


8,388 


1992 


8,131 


1993 


7,236 


1994 


6,875 


Thereafter 


181,447 


Total 


$220,707 



The approximate cost of property subject to operating leases and property held for lease at 
June 30, 1989 consisted of: 

Land and land improvements $47,000 

Buildings, structures, and related improvements 

(at cost, less accumulated depreciation of $80,000) 59,000 

Total $106,000 



Note 6 - Lease Termination Revenue 




In fiscal 1983 the Port had the opportunity to purchase land, drydocks and cranes for $14 
■.4^ million, under a right of first refusal option. In lieu of the acquisition, an agreement was 
made between the seller, the Port and a third party whereby the Port acquired the land for $1 
j'subject to a thirty-year lease with the third party. In fiscal 1988, the Port and the tenant 
•|r entered into a lease termination agreement. In consideration for the lease termination, the 
Port received the drydocks and cranes. 

Of tfie.$14,000,000 total property value received, $9,900,000 was recorded previously as 
deferred revenue, and was being recognized as rental revenue over the lease term. 
The balance of $4,100,000, together with the unamortized deferred revenue of 
$8,322,000, has been recognized as lease termination revenue in the accompanying 
•5^^ statement of income in 1988. 



24 



Note 7 - Employee Benefit Plans 



Retirement Plans: 

City and County of San Francisco 

The City has a defined benefit retirement plan (The Plan) which is administered by the San 
Francisco City and County Employees' Retirement System (Retirement System). This note 
contains condensed information on the Plan. More specific information, including ten-year 
historical trend data which provides information about progress made in accumulating 
sufficient assets to pay benefits when due, can be found in the financial statements and 
supplemental schedules of the Retirement System. The Plan covers the majority of all full- 
time employees of the Port along with other employees of the City. The Plan provides 
retirement, death and disability benefits. Benefits are based on specified percentages of 
average final compensation and length of service, with annual cost-of-living adjustments after 
retirement. 

The Plan is financed primarily by (a) contributions from the City, which includes contribu- 
tions fi-om the Port, (b) employee contributions, and (c) income fi-om investments. Pension 
expenditures of the City, including that of the Port, are based on rates set by the Retirement 
Board of the Retirement System. Annual contributions to the Plan are equal to amounts 
accrued for pension expense and include amortization of past service costs through 
June 30, 2000. 

The latest actuarial valuation of the Retirement System was completed on January 31, 1989 
by the actuarial firm of Milliman & Robertson, Inc. and was based upon employee data and 
asset information as of June 30, 1988. The significant economic assumptions used in the 
valuation as of June 30, 1988 were an annual return on investments of 8%, an annual increase 
in wages attributable to inflation of 6.5%, annual consumer price index increases of 5%, and an 
expected future growth in the number of employees of 0%. 

The following information is presented as a result of this valuation as of June 30, 1988 and 
includes substantially all City fund groups: 

(In miltions) 

Pension benefit obligation $ 4,429 

Net assets available for benefits at cost 

(market value $3,327) 3,221 

Unfunded pension benefit obligation $ /, 208 



The City met the actuarially determined contribution requirements for the years ended June 
30, 1989 and 1988. Pension costs relating to the Port were $1,311,000 and $1,310,000 for 1989 
and 1988, respectively. 

State of California 



The Port also contributes to the California Public Employees' Retirement System (PERS), an 
agent multiple-employer public employee retirement system that acts as a common invest- 
ment and administrative agent for participating public entities within the state of California. 
Certain employees who commenced their employment at the Port prior to February 1969 are 
eligible to participate in PERS. 

Participating employees are required to contribute 7 percent of their salary to PERS. The 
Port is required to contribute the remaining amounts necessary to fund the benefits for its 
members, using the actuarial basis recommended by PERS actuaries and actuarial consult- 
ants and adopted by the Board of Administration. 



Note 7 - Employee Benefit Plans (Continued) 



Retirement Plan (continued) 
State of California 



The Port's contributions to PERS totalled approximately $51,000 and $130,000 for 1989 and 
1988, respectively. The City's Office of the Controller Combined Financial Statements 
contain disclosures for all covered City employees. Amounts for the Port are not separable 
from the City totals. 

Deferred Compensation Plan 



The City offers its employees a deferred compensation plan created in accordance with 
Internal Revenue Code Section 457. The Plan, available to all Port employees, permits them 
to defer a portion of their salary until future years. 

The amount of assets and related participant obligations for Port employees is not separable 
from the total City plan. The total plan assets and obligations are accounted for in an agency 
fund of the City and are included in the City's Comprehensive Annual Financial Report. The 
amounts deferred by Port employees totalled $140,000 and $129,000 for 1989 and 1988, 
respectively. 

Health Care Benefits - Retired Employees 



The Port provides health care benefits for retired employees. Substantially all of the employ- 
ees may become eligible for these benefits if they reach normal retirement age. Those 
benefits, and similar benefits for active employees, are provided through the City's Health 
Care System. The Port recognizes the cost of providing the benefits by expensing the annual 
insurance premiums, which were approximately $292,000 and $258,000 for the years ended 
June 30, 1989 and 1988, respectively. The cost of providing benefits for the retirees is not 
separable from the cost of providing benefits for the active employees. 



Note 8 - Related Party Transactions 



The Port receives services from, and provides services to, various City departments. The 
cost of services received, included as operating expenses in the financial statements, was 
approximately $2,900,000 in 1989 and $2,700,000 in 1988. Services provided, included in 
operating revenue, amounted to approximately $584,000 and $521,000 in 1989 
and 1988, respectively. 



26 



Note 9 - Commitments And Contingent Liabilities 



The Port is presently planning various development projects which involve a commitment to 
expend significant capital funds. The Port had firm purchase commitments at June 30, 1989 
for approximately $2,000,000 for construction, material and services. 

Under a management advisory contract signed in December 1973, the Port transferred its 
railroad operations to Port Railroad, Inc. for a period of twenty years. The contract is 
cancellable by Port Railroad, Inc. with nine months' written notice. 

The Port is a defendant in various lawsuits; most deal mth personal injury or property 
damage resulting from accident or fire and are covered by insurance. In the opinion of 
counsel the likelihood of an unfavorable outcome is probable in some of the suits and, 
accordingly, accrued liabilities include the aggregate amount of deductibles under applicable 
insurance policies. However, a substantial number of the lawsuits are in the discovery stages 
and counsel to the Port cannot express an opinion as to the possible outcome of such 
litigation. The ultimate resolution of such matters is not expected to have a material effect on 
the Port's financial position or results of operations. 

In December 1985, the Port filed a declaratory relief action requesting the court to determine 
the Port had legally terminated an agreement with a property developer. The developer 
cross-complained against the Port, seeking damages in excess of $9 million. Counsel to the 
Port believes the Port should prevail in the case. 



Note 10 - Litigation Settlement 



During 1989, a settlement was reached on a suit against the City for salary rate adjustments. 
As a result of the settlement, the Port will make retroactive salary payments to those 
employees affected. The Port's share of the settlement amounts to $888,000 including 
interest. Payments will be made over a two year period. The expense of the settlement is 
reported as other expense and the related liability is included in accrued payroll and related 
costs for 1989. 




The Port of Son 
Francisco's Mission: 

RESPONSIBLE 
FOR CREATING 
A BALANCED 
AND DIVERSE 
WATERFRONT 
EVERYONE CAN 
BE PROUD OF, 
MINDFUL OF 
TRADITION WHILE 
LOOKING TOWARD 
TOMORROW. 



The Port of Son Francisco's 
Strategic Goals 

Achieving Integrated 
And Well-Planned 
Development, pg. 6 



Committed To Attracting 
Increased Shipping And 
International Trade, pg. 8 

Committed To The 
Development Of 
Water-Dependent 
Industries, pg. 12 

Providing Economic 
Benefits, pg. 14 

Responsive To Customers 
And The Public, pg. 15 

Providing Public Access 
And Recreation, pg. 16 

Enhancing Organizational 
Efficiency, Effectiveness 
And Employee 
Participation, pg. 17 




A fisherman at Pier 
45, the Port's fish 
processing center in 
Fisherman's Wharf. 



Financially Sound And 
Resourceful, pg. 18 



Like a rudder guiding a ship, the Port's new strategic plan steers us in a focused direction, carving a pa^ of purpose and conviction 



toward a destiny made clear. Maneuvering through the changing tides of the shipping industry and the heightened environmental 



wave worldwide, the Port emerged from 1 990 with a renewed resilience... and greater appreciation for the many water-dependent 



industries that contribute to the livelihood of the Port and welfare of the city. 



In the swirl of activity that characterized 1 990, perhaps the most memorable moments were the time given to introspection and 



future planning by Port staff for the Strategic Plan. Unlike the more sensational, colorful events of the year, the drafting of the 



Strategic Plan and the Port's Mission and Bonis was a painstaking process that encouraged the unraveling of old truths for h 



development of contemporary solutions. And in the soul searching that occurred, the Port returned to its historic roots as a 



legendary seaport and found the blueprint for its mission. We're still the old port...but with a new face.. .and a fresh perspective. 



The Port of San Francisco's 1990 



workforce representing the full range 



commerce. These are the men and 



busding transportation systems; the 




Annual Report is a celebration in diversity — a diverse 



of port services bolstering international trade and 



women who get cargo off ships and on to America's 



fishermen who rise early to catch fish for local 



consumption and international distribution; the dock workers who repair ships, load warehouses, and maintain our waterfront. 



White collar or blue collar, company owner or employee — diey are the key to achieving the Port's mission of "creating a balanced 



and diverse waterfront everyone can be proud of " 




James Bouskos 
Vice-Prasident 



San Francisco's great 
natural harbor has 
always been the center 
of our regional economy, 
a source of economic 
growth, productive 
jobs, and needed civic 
revenues. Our guiding 
principle remains that 
we must continue to 
develop the Port in 
this manner for the 
benefit of citizens of 
our community. 

In 1989 we laid the 



tunnels to accommodate 
double-stacked container 
carriers sent a strong 
message to the 
shipping industry that 
San Francisco was 
serious about attracting 
business. 

These and other 
improvements bore fruit 
this year with the 
decision by Nedlloyd 
Lines to make the Port 
of San Francisco its 
transshipment hub 



proposals for the 
construction of a new 
international Cruise 
Terminal. 

It was in many other 
ways a tremendously 
productive year. We 
received funds to begin 
earthquake repairs at 
our fish processing 
center at Pier 45, a vital 
first step toward our goal 
of returning all fisher- 
men to Fisherman's 
Wharf. Pier 7 was 




Anne W. Hoisted 

foundation for the 
resurgence of the Port of 
San Francisco by 
starting major infrastruc- 
ture improvement 
projects. This past year 
we began to actually 
build on that foundation. 

The Strategic Plan 
outlined ambitious 
goals to maintain a 
balanced and diverse 
waterfront — to increase 
the Port's cargo base, 
provide improved 
facilities for water- 
dependent industries, 
increase public access, 
and provide a high 
level of service to 
Port customers. 

Critical improvements 
in the port's infrastruc- 
ture were completed in 
1990. Automation of gate 



Dr. Arthur H. Coleman 

between the Pacific Rim, 
Latin America and the 
Caribbean. This almost 
doubles the total volume 
of containers handled by 
the Port. The renegotia- 
tion of contracts with sbc 
shipping companies, 
including the giant 
Evergreen Lines, also 
spoke to our ability to 
compete for our share of 
maritime commerce. 

The spade work 
performed by the Port's 
cruise industry task 
force in 1988 also paid 
off in 1990 when Crystal 
Cruise Lines, owned by 
the giant Japanese NYK 
Line, agreed to 
homeport its luxurious 
MV Crystal Harmony 
here. We have a 
continuing commitment 
to restoring San 



Douglas F. Wong 

transformed from an 
obsolete eyesore into a 
picturesque, active 
public access resource. 
And we are well along in 
the process of repairing 
the damage on the 
waterfront wreaked by 
the Loma Prieta 
earthquake. 

The key to our contin- 
ued success remains our 
ability to make the 
maximum possible use 
of this great resource — 
from international 
shipping to cruises to 
recreational sailing, from 
enhanced commercial 
fishing facilities to our 
newly remodeled fishing 
pier. The Port Commis- 
sion remains dedicated 
to continuing in this 
direction of multifaceted, 
balanced growth to allow 



\ J a m e s R. Herman 

President, San Francisco Port Commision and international Longshoreman's and Warehouseman's Union 



facilities at the South 
Container Terminal, for 
example, and engineer- 
ing studies of local rail 



Francisco as an impor- 
tant destination on 
cruise itineraries, as 
evidenced by the 
issuance of a request for 



the Port of San Fran- 
cisco to resume its 
rightful place as one of 
the premier ports of the 
Pacific Basin. 



Executive Director's Report 




A great deal of thought 
went into the new 
mission statement of the 
Port of San Francisco. 
We discussed, debated, 
argued and finally 
agreed on virtually every 
word of the mission 
statement. Given the 
importance of our new 
mission statement to all 
aspects of the Port's 
activities, I feel I should 
explain the thinking 
behind these words and 
what they mean. 

"Responsible" is a very 
important word. It 
means the Port is 
responding to a special 
public need. San 
Francisco owes its 
history to its harbor, and 
today we at the Port are 
all committed to 
ensuring that the Port 
continues to serve the 
needs of this City as well 
as the region and the 
nation as a whole. 

"Creating" indicates our 
desire to do more than 
simply assemble a series 
of prefabricated parts. 
Our waterfront repre- 
sents a special opportu- 
nity to do much more. 
We want to develop 
something that is 
greater than the sum of 
the individual parts. The 
individual activities of 
our waterfront should 



compliment and support 
one another. 

The words "balanced 
and diverse waterfront" 
reflect the need to 
respond to many diverse 
interests in managing 
the Port. There cannot 
be winners and losers. 
We need to recognize 
that there are many 
different businesses the 
Port is involved in and 
we should not try to 
choose between them. 
Instead, we must 
recognize that all are 
vital to the long term 
health of the Port. 

"Everyone can be proud 
of is an inclusive 
statement intended to 
show that we believe it is 
possible for the Port to 
respond to the diverse 
interests of its stakehold- 
ers. However, we 
qualified the statement 
by saying "can" rather 
than "will," a subtle but 
important distinction 
that tells the world no 
single interest group 
should expect to agree 
with everything we do. 
Some of our activities 
will be undertaken to 
respond to others. 
However, accepting the 
need for balance, we can 
be proud of our water- 
front if we take the time 
to understand the needs 
and interests of others. 

Tradition is important to 
all of us in San Francisco 
and is not something we 
would want to cast aside. 
That is why we included 



the words "mindful of 
tradition." Our tradition 
is a rich and important 
influence over what we 
are today. Nevertheless, 
we recognize the need to 
anticipate the future and 
respond to change; 
"while looking toward 
tomorrow" makes that 
point. The whole phrase 
underscores the 
importance of our 
tradition and our need to 
remember this legacy, 
but we recognize our 
real hope is for the 
future. 

Our mission is sup- 
ported by eight goals. 
You will see these goals 
described through the 
summaries of our 
accomplishments for 
1990. As you read on, 
you will see how the 
Port's mission reflects 
responsibility for a 
unique public resource, 
creating a balance 
among the diverse 
interests of the Port 
family. Our tradition 
serves as a frame of 
reference as we look 
toward the future. And 
through everything we 
do, the Port of San 
Francisco is truly 
something we can all be 
proud of. 



ACHIEVINGINTEGRATEDANDWELLPIANNEDDEVELOPMENT, 
Strategic Plan projects could com- 



1990 saw the adoption 
and implementation of 
the Port's first strategic 
plan in its 128 year 
history, an idea initiated 
from a Mayoral Task 
Force of Port tenants, 
users and community 
groups who participated 
throughout the study. 
After careful review of 
numerous focus group 
surveys, interviews with 
a broad range of Port 
customers, and detailed 
market analysis con- 
ducted by an outside 
consultant team, 
(Cresept, a Powers 
Towers Perrin Com- 
pany) Port senior staff 
members developed the 
new Mission, Goals and 
Initiatives that will guide 
the Port into the future. 
Task forces composed of 
Port staff at all levels are 
currently implementing 
the eight initiatives of 
the new Mission and 
Goals, and some of the 
accomplishments listed 
in the following pages 
are a direct result of 
these task force efforts. 
Land Use Plan 
One of the objectives 
identified in the Port's 
strategic plan was to 
conduct land use plans 
for specific areas of the 
waterfi-ont. This effort 
was given added 
impetus after a local 
initiative (Proposition H) 
passed requesting the 
Port Commission to 
complete a comprehen- 
sive land-use plan before 
further non-maritime 



mence. To respond to 
Proposition H, the Port 
expanded its Planning 
staff, set aside other 
resources for accom- 
plishing this ambitious 
effort, and expects to 
kick-ofi' the program in 
early 1991. 

The emphasis of the 
land-use plan will be on 
the Port's maritime 
needs, translating 
growth trends of the 
maritime industry into 
land use and capital 
funding requirements. 
Port planners will also 
identify properties not 
needed for industrial 
maritime development 
which could, therefore, 
satisfy other strategic 
goals of providing public 
access/recreation and 
economic benefit to the 
cify, while allowing the 
Port to remain finan- 
cially sound and 
resourceftil. Public 
participation will be a 
vital ingredient to the 
land use plan, ensuring 
that the results respond 
to the concerns and 
wishes of our 
stakeholders. 

Mission Bay 

A historic proposal to 
transform an industrial 
tract into a bustling new 
neighborhood known as 
Mission Bay will result 
in a 50 percent expan- 
sion of the Port's North 
Container Terminal at 
Pier 80. Over ten years 
in planning, the Mission 
Bay project calls for the 



exchange of 14.8 Port- 
owned acres in the 
Mission Bay neighbor- 
hood for 34.5 acres 
owned by the City and 
Sante Fe Pacific Realty 
immediately adjacent to 
the Port's container 
facilities. In addition, the 
Port will lease 22 acres 
to the Mission Bay 
project for open space 
purposes, and the Port 
will be compensated at 
$2 million a year for 
thirty years. 

Waterfront 

Transportation Projects 

The Waterfi-ont Trans- 
portation Projects are a 
series of four separate 
roadway and transit 
projects designed to 
enhance public access to 
the Bay, and convert the 
Embarcadero roadway 
into a grand vehicular, 
transit and pedestrian 
boulevard along the 
waterfront. With 
construction primarily 
on Port lands, Port staff 
and Commissioners 
have been actively 
involved over the past 
five years in project 
planning, design and 
engineering. 1990 saw 
significant progress in 
urban design elements 
of the project, with a 
Memorandum of 
Understanding between 
various City agencies 
expected in early 1991. 
Upon Port Commission 
approval of design and 
resolution of such issues 
as parking and mainte- 
nance, final design and 
construction could begin 
in the fall of 1991. 



COAAMinED TO AHRACTING INCREASED SHIPPING AND INTERNATIONAL TRADE. 



Transshipment 

Unquestionably the 
most exciting recent 
development in the 
shipping and interna- 
tional trade area is San 
Francisco's emergence 
as a major transship- 
ment port. Transship- 
ment has long provided 
foundation business for 
some of the world's 
largest container ports, 
including Rotterdam and 
Hong Kong. The 
September announce- 
ment by Nedlloyd Lines 
that San Francisco 
would be used as one of 
two transshipment hubs 
for relaying containers 
between vessels in their 
Latin American and Far 
East services was 
followed almost immedi- 
ately by news that San 
Francisco would be the 
only such hub on the 
American side of the 
Pacific. By multiplying 
and doubling their 
business at the Port, 
Nedlloyd will provide 
new revenues to 
accelerate terminal 
improvements without 
adding a single truck to 
the local highways. 

The new business of 
Nedlloyd, when parlayed 
with projected growth by 
Transpacific and other 
lines, promises to result 
in the most successful 
year ever for container 
shipping at the Port. FY 
89/90 container volume 
of 116,000 TEU is 
expected to jump to 
221,000 during the 
current year — a one-year 
growth rate of over 
90 percent. 

Shipping Lines 

Six steamship lines, 
representing every 
major trade route served 
from San Francisco, 
renewed their long-term 



agreements with the 
Port during the year. 
South Terminal custom- 
ers Evergreen, Splosna 
Plovba and 

Grancolombiana joined 
North Terminal custom- 
ers Navicana, ELMA and 
Nedlloyd in extending 
their contracts with the 
Port of San Francisco for 
another five years. 

Besides providing a 
strong vote of confi- 
dence in the Port, the 
securing of long term 
commitments from this 
key group of carriers 
opens the door for 
further investment and 
improvement in cargo 
handling facilities. 

Trade/Tonage 

Both total tonnage and 
container tonnage 
increased 4 percent 
during Fiscal 89/90. 
With continuing high 
world demand for 
Northern California 
agricultural products, 
exports again out- 
weighed imports, but the 
gap narrowed slightly. 
Imports accounted for 
45% of Port of San 
Francisco cargo — up 
fi-om 42% the previous 
year. 

Trade with Asia and the 
South Pacific again 
comprised two-thirds of 
the Port's cargo. After 
registering a first-ever 
decline in FY 88/89, 
recovery of the Port's 
transpacific trade 
continued throughout 
89/90 resulting in 
growth of nearly 7 
percent. Evergreen 
Marine Corporation of 
Taiwan remained the 
Port's largest container 
shipping customer, 
moving about one 
million tons through San 
Francisco facilities. 
China Ocean Shipping of 
the People's Republic of 



China (COSCO) was the 
Port's fastest growing 
customer in FY 89/90. 
After tripling their total 
container tonnage in FY 
88/89, COSCO still 
doubled their business 
at the Port during 
FY 89/90. 

Improvements 

Through the joint efforts 
of our terminal opera- 
tors. Port Maritime, 
Engineering and 
Maintenance crews, 
work was completed at 
the South Terminal gate 
— enabling implementa- 
tion of a fully automated 
delivery and receiving 
system. Operations at 
the Terminal were 
converted to partially 
wheeled operation 
(meaning containers are 
landed directly to 
chassis fi-om the ship) 
further speeding the 
movement of cargo 
through the facility. 

Significant progress was 
made on engineering 
work for modification of 
train tunnels to permit 
double-stack container 
trains, paving the way 
for project completion by 
the next summer. The 
implementation of 
double-stack train 
service through the Port 
will provide San 
Francisco's next growth 
surge in the highly 
competitive container 
market. Because of San 
Francisco's unique 
capability to transfer 
containers between ship 
and train inside the 
shipping terminal, this 
new business will be 
similar to the newly won 
transshipment business 
in that it can provide 
new revenues, jobs and 
economic impact 
without contributing to 
local highway traffic. 



The Port of San Francisco's Mission 




W a t e r 

Dependent 

Industries 




COMMITTED TO THE DEVELOPMENT OF WATER-DEPENDENT INDUSTRIES. 



Fisherman's Wharf 
Seafood Center 

The extensive damage to 
the Port's fish handling 
facilities at Pier 45 fi-om 
the 1989 earthquake 
resulted in the restruc- 
turing of the 
Fisherman's Wharf 
Seafood Center project. 
The need to put the 
seafood industry back in 
full operation put the 
scheduling of the repair 
work at Pier 45 ahead of 
the construction of new 
commercial fishing 
berths at the Hyde 
Street Harbor. 

The Porf s ability to 
begin engineering work 
for the $9 million 



earthquake repair 
project on this 11-acre 
pier was largely due to 
economic development 
and disaster assistance 
grants from federal and 
state agencies. 

A $2 million grant was 
obtained fi-om the 
California Business, 
Transportation and 
Housing Agency's 
Unitary Tax Fund and 
another $2 million grant 
was secured from the 
U.S. Department of 
Commerce Economic 
Disaster Relief Program. 
Reimbursement for the 
costs of earthquake 
repairs is also being 



sought from the 
Federal Emergency 
Management and 
Assistance Agency 
(FEMA), and the Port 
Commission has 
authorized use of Port 
funds to pay for the 
remaining costs of 
repairs. 

The Port expects to 
begin construction of 
Phase I in the Summer 
of 1991 and complete 
construction in the Fall 
of 1992. Phase I work 
includes repair of pier 
subsurface and slab, 
seismic bracing, code 
upgrades for water, 
sewer, electricity; roof. 



building wall and seawall 
repairs. The Port has met 
with all members of the 
fishing industry who have 
expressed an interest in 
leasing space at Pier 45 
and long term leasing 
discussions are under- 
way. 

Completion of environ- 
mental review for future 
phases of Pier 45 work 
and the Hyde Street 
Harbor is currently 
pending, and financing is 
being sought. 

Cruise Industry 

The Port's Pier 35 cruise 
terminal continued to 
receive guests from the 
nine different cruise lines 




calling at San Francisco. 
From May to Septem- 
ber, Princess Cruise's 
"Love Boats" were 
frequent visitors to the 
Pier 35 cruise facility. 
Princess offered 10-day 
round-trip itineraries on 
the increasingly popular 
San Francisco to Alaska 
run. Princess recently 
announced a 100% 
increase in capacity on 
the San Francisco/ 
Alaska itinerary this 
coming summer with 12 
sailings on the 1,200 
passenger Sky Princess. 

San Francisco's newest 
cruise customer is 
Crystal Cruises, which is 



From oil tankers 
to cargo vessels to 
cruise ships, ship 
repair workers 
have adapted to 
the increasingly 
complex 
technology of 
'modem day ships. 



owned by shipping giant 
NYK Line (Nippon 
Yusen Kaisha). Crystal 
homeported their 
luxurious first new 
vessel, the MV Crystal 
Harmony in San 
Francisco this past 
summer. Crystal Cruises 
offered four round-trip 
itineraries to Alaska and 
British Columbia on the 
$200 million ship. 

In May of 1990, the San 
Francisco Port Commis- 
sion held public 
hearings on the 
adequacy of Pier 35 to 
meet growth needs of 
the cruise industry and 
debated the need for a 



new terminal at Piers 
30/32. A staff report 
issued prior to the public 
hearing had concluded a 
new terminal would 
provide civic, economic 
and indirect benefits to 
the city; the cruise 
terminal at Pier 35 
required improvements 
to better serve the 
industry and its passen- 
gers; and the existing 
terminal should be more 
active in idle periods. 

The well-attended public 
hearing resulted in a 
decision to create a new 
cruise terminal at Piers 
30/32 while allowing for 
minimal upgrades to 



9 




■' 



keep Pier 35 operational 
during the estimated 
fiveyear construction of 
the new terminal. The 
Port Commission 
directed staff to draft a 
Request for Proposals 
(RFP) for a mixed-use 
international cruise 
terminal on Piers 30/32 
and Seawall lots 329 and 
330 (across the street 
from the Pier). Port staff 
also developed a work 
plan to study interim 
uses and improvements 
to the existing terminal 
at Pier 35. The results of 
the Cruise Terminal RFP 
will be announced in 
1991. 




Economic 



Benefits 



® 




Architect Silvia Kwan 
is a partner of Kwan/ 
Henmi Associates, a 
certified minority 
business firm that's 
part of the technical 
team for the 
Fisherman's Wharf 
Seafood Center Project. 



PROVIDING ECONOMIC BENEFITS. 



Ferry Operarions 

Following the earth- 
quake of 1989 when the 
Port's ferry operations 
proved successful in 
helping to relieve traffic 
congestion caused by 
the break in the Bay 
Bridge, Caltrans 
(California Department 
of Transportation) and 
the Federal Highway 
Administration agreed to 
fund various transit 
improvements and 
"traffic systems manage- 
ment projects." This 
year, the two agencies 
awarded $880,000 to the 
Port of San Francisco for 
ferry terminal improve- 
ments such as an 
additional barge and 
passenger walkway, a 
patron terminal shelter 
for ticket sales, direction 



information and other 
passenger services, 
improved lighting, 
signage and seating. 
These funds did not 
require a local match 
and will go a long way in 
the development of more 
permanent and im- 
proved ferry transit 
operations. 

Surface Parking Lots 

The Port Commission 
issued a Request For 
Proposals in 1990 for 
interim surface parking 
on up to eight seawall 
lots. The goal was to 
increase parking 
revenues and capacity 
while retaining maxi- 
mum flexibility for 
future development of 
the lots. Of the seven 
parking companies that 
responded, a joint 



venture including a local 
minority owned business 
won the bid with an offer 
providing almost $90,000 
of monthly revenues to 
the Port, translating to 
an annual increase of 
more than $380,000 over 
the income generated by 
the same lots in the 
previous year. Approval 
by the Port Commission 
for two-year leases on 
seven seawall lots was 
given at the end of 1990. 

Disadvantaged 
Business/ Affirmative 
Action Programs 

Providing an innovative 
business model for the 
rest of the City, the Port 
Commission adopted a 
Disadvantaged Business 
Enterprise Program that 
requires commercial 
property developers to 
specify the percentage 



involvement of small/ 
disadvantaged busi- 
nesses throughout the 
span of a project. This 
program will apply to all 
future development 
projects, requiring 
developers to break- 
down projects into tasks 
that can be shared with 
small/ disadvantaged 
businesses. An Affirma- 
tive Action Specialist 
was also hired to create 
comprehensive pro- 
grams for Port employ- 
ment and contracting/ 
purchasing opportuni- 
ties. The specialist is 
responsible for active 
community outreach, 
training management 
staff on non-discrimina- 
tory rating criteria, data 
collection, analysis and 
progress reports. 



RESPONSIVE TO CUSTOMERS AND THE PUBLIC. 



Public Boat Tour Series 

Over 3,000 San 
Franciscans enjoyed the 
Port's free public boat 
tours of San Francisco's 
working waterfront. 
With the theme of 
"Rediscover Your 
Waterfront", the fully 
narrated series of eleven 
boat tours travelled the 
shoreline of the Port's 
seven-and-half miles of 
jurisdiction to see 
historic piers and 
thriving waterfront 
industries. Mcluded in 
the tour itinerary were 
giant crane operations, 
historic landmarks, 
state-of-the-art shipping 
facilities, fishing fleets, 
ship repair docks and 
recreational areas. 

Assisting in the Porf s 
efforts to draw more 
people to the waterfront 
were Homblower 
Yachts, the Blue and 
Gold Fleet, the Red and 
White Fleet and Regina 
del Mar, all of whom 
generously provided 
vessels. Public response 
to the free tours was 
overwhelmingly 
positive — special 
invitations were sent to 
senior citizen, environ- 
mental, labor and 
neighborhood groups — 
and the bay tours could 
develop into an annual 
tradition. San Francisco 
Mayor Art Agnos 
attended a couple of the 
boat tours and lauded 
the opportunity for local 
citizens to enjoy our 
valuable waterfront 
resources. 



Fisherman's Wharf 
Beaurification Project 

Merchants and Port 
officials jointly engaged 
in a Fisherman's Wharf 
"facelift" that included 
increased garbage pick- 
up, steam cleaning of 
sidewalks and stronger 
pest control efforts. The 
number one ranked 
tourist attraction in the 
city also got the benefit 
of a full-time city 
policeman to patrol Port 
property on a regular 
basis, as well as an 
Environmental Control 
Officer to launch an 
education and enforce- 
ment program on 
environmental laws for 
neighborhood mer- 
chants and residents. 
San Francisco passed 
additional regulations for 
"charitable solicitors" 
and the improvement 
was especially visible in 
Fisherman's Wharf 
where the proliferation 
of T-shirt vendors 
caused some traffic and 
safety concerns. The 
joint beautification 
efforts by Port staff and 
Fisherman's Wharf 
merchants have 
increased morale, 
brought immediate 
benefits to the area, and 
laid a strong foundation 
for further improve- 
ments in the northern 
waterfront. 



Customers/ 
Public 




Jacqueline Flagg 
answers public inquiries 
about the Port of San 
Francisco, a self- 
supporting city Cheney 
that's run like a business 
and receives no city 




tax dollars. 



A clown works 
the crowd during 
the grand opening 
of Pier 7, the Port's 
newest public 
access and fishing 
pier. 



PROVIDING PUBLIC ACCESS 

Special Events 

San Francisco's bay has 
often been called the 
world's best amphithe 
ater for spectacular 
events with the water- 
front and hill dwellers of 
San Francisco providing 
a rapt audience. That 
claim proved true in 
1990 when San 
Francisco's Fleet Week 
won the U.S. Navy 



AND RECREATION. 

downtown community 
and local residents. 
Festa Italiana, a major 
community event hosted 
by the families of 
Fisherman's Wharf, was 
staged outdoors for the 
first time in the central 
plaza of the Wharf and 
new crowds were drawn 
to this eighth annual 
urban fair. 



officially dedicated by 
S.F. Mayor Art Agnos 
with dozens of school 
children and senior 
citizens participating in 
the waterfront 
celebration. 

San Francisco 
Sailing Center 

A development memo- 
randum was executed 
for the San Francisco 
Sailing Center located at 




award for top special 
event of the year 
worldwide. Hundreds of 
Bay Area visitors flocked 
to the Port's Pier 35 to 
view visiting historic and 
tall ships such as the 
Spanish Juan Sebastian 
De Elcano, one of the 
world's premier tall 
ships with four towering 
masts and a 250-foot 
white hull. The Coast 
Guard celebrated its 
200th birthday with a 
Bay celebration featur- 
ing full-dressed ships 
from round-the-world, 
including the first visit 
by a Soviet vessel since 
World War II. TTie Port 
hosted its seventh 
annual Whaleboat Race 
and provided free 
entertainment for the 



Pier 7 

TTie longest public 
access pier into the 
Bay — and some claim 
the most spectacular 
pier — opened this year 
with a grand celebration 
for Pier 7, the Port's new 
recreation and fishing 
pier. The $6.5 million 
pier is flanked with old- 
fashioned Embarcadero 
light fixtures, ornamen- 
tal iron handrails, 
antique style iron/ 
wooden benches, and 
timber plank decking. 
Funded in part by the 
Port of San Francisco, 
the city's Recreation and 
Park Open Space Fund, 
California Department of 
Fish and Game, National 
Park Service and 
California Coastal 
Conservancy, Pier 7 was 



Piers 24/26 directly 
under the Bay Bridge. 
The Sailing Center, 
introduced in 1989, 
features an expanded 
yacht harbor with strong 
sailing program and 
public access pier, all to 
be financially supported 
by a 170-room hotel. The 
development memoran- 
dum between the Koll 
and Bressie Companies 
and the Port laid out the 
process to seek and 
obtain all regulatory 
approvals, and outlined 
the conditions to be met 
before the Port Commis- 
sion could consider a 
lease. Further progress 
for the Piers 24/26 
project is pending 
completion of a water- 
front land-use plan. 



Organization/ 
Employee 




ENHANCING ORGANIZATIONAL EFFICIENCY, 
EFFECTIVENESS AND EMPLOYEE PARTICIPATION 



The October 1989 
earthquake renewed 
Port awareness of its 
greatest assets — the 
employees — and 
consequently safety 
seminars on earthquake 
preparedness and CPR 
training were conducted, 
along with the creation 
of survival cabinets 
complete with search 
and rescue kits. A staff 
news-letter was also 
launched to increase 
employee communica- 
tion. 

Employee participation 
was a key ingredient in 
the undertaking of the 



Port's first organizational 
analysis ever. The 
analysis will align the 
organizational structure, 
reporting lines and 
staffing to successfully 
implement the Port's 
strategic mission, goals 
and objectives. Port staff 
from all levels sat on the 
selection panel, and 
indeed, a critical factor in 
the selection of the 
consultant team was the 
extent of staff participa- 
tion during the organiza- 
tional analysis. The first 
results of the organiza- 
tional review are ex- 
pected in March of 1991. 




A pile-driving 



team, part of the 



Port's 125-member 



Maintenance 



Department 



responsible for 



waterfront upkeep. 




FINANCIALLY SOUND AND 

Fiscal Year 1989/90 was 
somewhat unusual for 
the Port of San Fran- 
cisco due to an unex- 
pected event, the Loma 
Prieta earthquake of 
October 1989. Despite 
the property and 
infrastructure damage 
caused by the earth- 
quake along with the 
resultant decline in 
commercial revenues, 
we were still able to end 
the year with a surplus, 
albeit a smaller net profit 
than in previous years. 

In fiscal year Quly 
through June) 1989/90, 
the Port of San 
Francisco's operating 
revenues were 
$29,610,000, three 
percent lower than 
1988/89. The revenues, 
combined with operating 
expenses of $27,811,000 
(a 9.6 percent increase 
from the previous fiscal 
year), resulted in an 
operating income of 
$1,799,000, a decrease of 
$3,362,000 fi-om 1988/ 
89. The damage from 
the earthquake caused 
lower than expected 
rental revenues, in 
addition to higher 
operating costs due to 
emergency repairs by 
our Maintenance and 
Engineering crews for 
work not covered by 
Federal and State 
earthquake assistance 
(i.e., seismic upgrades, 
retrofitting and other 
improvements). The 
$4,225,000 Usted under 
Other Income 



RESOURCEFUL. 

(Expense) for earth- 
quake damage and 
expenses is the amount 
eligible for reimburse- 
ment by Federal and 
State agencies. 

In addition to the $11.5 
million in Maritime 
revenues, $lmillion 
in rent from maritime- 
related industries is 
included under Property 
rent, increasing 
Maritime's contribution 
to 42 percent of total 
Port revenues. Property 
rentals contributed 
$16.7 million, 57 percent; 
miscellaneous income 
added $400,000 or 1 
percent of total Port 
revenues. 

The Port has stream- 
lined its capital planning 
process, defining criteria 
and establishing a new 
methodology for setting 
capital priorities. With 
the assistance of its 
Financial Advisor, the 
Port is developing a 
comprehensive financial 
plan incorporating the 
new capital plan, and is 
building a long-term 
debt management model 
to provide efficient and 
up-to-date management 
information. 

Port staff were also 
resourceful in the past 
year in obtaining state 
and federal monies for 
various projects. A grant 
from the California 
Department of Transpor- 
tation and Federal 
Highway Administration 



for $880,000 was given to 
S.F.'s port for permanent 
improvements to our 
ferry terminal operations 
at Pier 1/2 (see page 
14.) A total of $4 million 
in economic develop- 
ment and disaster 
assistance grants from 
the federal and state 
governments was 
awarded for the earth- 
quake-damaged fish 
processing center at Pier 
45, where nine fishing 
companies had to be 
relocated to other Port 
piers (page 12.) Reim- 
bursement for costs of 
earthquake repairs along 
the Port's seven and half 
mile waterfront is also 
being sought from the 
Federal Emergency 
Management and 
Assistance Agency 
(FEMA). 

The oudook for fiscal 
year 1990/91 is optimis- 
tic with the tremendous 
growth in cargo volumes 
through the Nedlloyd 
transshipment hub, and 
a return to pre-earth- 
quake commercial 
revenue levels. On the 
following pages is a 
detailed analysis of the 
Port's financial portfolio 
for fiscal year 1989/90. 



PAGE 

Independent Auditor's Report 2 1 

Balance Sheets 22 

Statement of Revenues 23 

Statement of Equity 23 

Statements of Changes in Financial Postilion 24 

Holes to Financial Statements 25 



s 

INDEPENDENT AUDITOR'S REPORT 



THE HONORABLE SAMUEL D. YOCKEY, CONTROLLER, 
CITY AND COUNTY OF SAN FRANCISCO 



We have audited the accompanying balance sheet of the PORT COMMISSION, CITY AND 
COUNH OF SAN mNClSCO, PORT OF SAN FRANCISCO ("Port") as of June 30, 1990 and 
1989, and the related statements of income, equity, and changes in financial 
position for the years then ended. These financial statements are the responsibility 
of the Port's management. Our responsibility is to express an opinion on these 
financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing stan- 
dards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements are free of material 
misstatement. An audit includes examining, on a test basis, evidence supporting 
the . amounts and disclosures in the financial statements. An audit also includes 
assessing the accounting principles used and significant estimates made by 
management, as well as evaluating the overall financial statement presentation. 
We believe that our audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present fairly, in all 
material respects, the financial position of the Port as of June 30, 1990 and 1989, 
and the results of its operations and changes in its financial position for the years 
then ended, in conformity with generally accepted accounting principles. 

Hood and Strong 
Morris, Davis & Company 
Certified Public Accountants 



September 28, 1990 

J- 



BALANCE SHEET 

June 30, 1 990 and 1989 (in thousands) 



ASSETS 



Current Assets; 

Cosh ond investments, principallY in City Jreasuty-Poit operoting fund 

Receimbles 

Materiols ond supplies 

Prepaid insurance ond other assets 

Total Current Assets 



1990 

$21,401 
9,206 
1,418 
887 

32,912 



1989 

$26,236 
3,389 
1.310 
1.065 

32,000 



Restricted Assets: 

Cash ond shart-term investments: 
Capitol outlay 

Bond interest and redemption 
Lessee deposits held in twst 



14,451 
9,901 
1.533 



16,558 
9,934 
1.387 



Total Restricted Assets 

Property, Plant, and Equipment—Net 



25.885 



190,927 



27.879 



187,349 



Long-Term Receivable 

Total Assets 

LIABILTIES AND EQUITY 



493 



$250,217 



436 



$247,664 



Current Liabilities: 

Accounts payable and accrued liabilities 
Current maturities of long-tern) debt 
Accmed bond interest payable 

Total Current Uobilities il ' » 

'WW- tI| JL 
Payable from Restricted Assets: 

Accwed bond interest payable 
Lessee deposits 

Deferred grants mVi^ 



|| Total payable from restricted assets 



« Deferred Revenue 



Long-Term Debt— Net of current maturities - 



, Total Liabilities 

Equity: 

Contril^ted capital 
Revaluation of property 
4. - ,: Retained eamings 

Total Equity 




$8,381 
3.325 
195 

11.901 



2.489 
1.533 , 
143 

4,165 

335 

74,797 

91.198 



18,156 
56.063 
84,800 

159.019 



$4,748 
3,715 
214 

8.677 



2,522 
1.387 



3.909 



442 



78.021 



91.049 



15.793 
56.063 
84.759 

156.615 



Total Uobilities and Iguity 



$250.217 



$247.664 



The accompanying notes are on integral part of this statement. 



STATEMENT OF INCOME 

Yeais Ended June 30, 1 990 and 1 989 (in thousands) 



INCOME 



Operating Revenues; 

Property rentals-commercial 
Properly rentals-maritime 
Wharfage, dockage, and demurrage 
Commercial power 
Other 

Total Operating Revenues 

Operaring Expenses: 

Operations 
Maintenance 
Depreciation 
Commercial power 
Fire boat operations 

Total Operating Expenses 

Operating Income 

Other Income (Expense): 

Interest income 
interest expense 

Earthquake damages and expenses 
Federal and state earthquake assistance 
Litigation settlement 

Gain on sale of property, plant and equipment 



1990 

$16,910 
4,793 
6,676 
869 
362 

29,610 



10,793 
10,137 

4,877 
695 

1,309 

27,811 
1,799 



2,800 
(4,558) 
(4,225) 

4,225 



1989 

$17,980 
4,372 
6,427 
856 
897 

30,532 



9,538 
9,662 
4,530 
644 
997 

25,371 
5,161 



2.983 
(4,290) 



29 



Total Other Income (Expense) 
fiet Income ■ 



(1.758) 



$41 



(2,166) 



$2,995 



STAHMENT OF EQUITY 

Years Ended June 30, 1990 and 1 989 (in ihousmk) 



Balances as of June 30, 1988 



. Capital grants " ^ 

Net income for the year ended June 30, 1 989 



Contributed 
Capital 

$15,208 

585 



Revaluation 
of Property 

$56,063 



Retained 
Earnings 

$81,764 



2,995 



Total 
Equity 

$153,035 

585 

2.995 



Balances as of June 30, 1989 

Capital grants 

Net income for the year ended June 30, 1 990 



15,793 
2.363 



56,063 84.759 156.615 
2.363 

41 41 



Balances as of June 30, 1990 

The accompanying notes are an integral part of this statement. 



$18,156 



$56,063 $84.8(X) 



$159,019 



STATEMENT OF CHANGES IN THE FINANCIAL POSITION 

has ended June 30, 1 990 and 1989 (in thousands) 



SOURCES OF FUNDS 



Operations: 1990 1989 

Net income $41 $2,995 

Expenses not using wodcing capital: Oepieciation and amortization 4,978 4,632 
Revenue not providing wodcing capital: 

Recognition of deferred revenue (107) (127) 

Gain on sale of property, plant and equipment (29) 

fatal from operations 4,912 7,471 

Capital grants received 2,363 585 

Decrease in restricted assets 1,994 1,282 

Increase in liabilities payable from restricted assets 256 21 

Proceeds from sale of property, plant and equipment 135 

Total sources of funds - . 3,525 9,494 

USESOF FUNDS: 

Acquisition of property, plant, and equipment 8,455 3,021 

Payments and current maturities of long-term debt ' 3,325 3,715 

Increase in long-term receivable 57_ 51 

Total uses of funds 11,837 6.787 

(Decrease) Increase in Woridng Capital ($2,312) $2,707 

WORKING CAPI^ BY COMPONENT: 

Cash ($4,835) $2,700 

Receivables 5,817 392 

Materials and supplies 108 100 

Prepaid insurance and other assets (178) (48) 

Accounts payable and accrued liabilities (3,633) (439) 

Current maturities of long-term debt 390 (15) 

Accrued bond interest payable 19 17 

(Decrease) Increase in Working Capital ($2,312) $2,707 



Hie oaminiiyiiig notes me ait inlegml pml ol lliis stdemeiit. 



NOTES TO FINANCIAL STATEMENTS 



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: 



Organization 

The Port of San Francisco ("Port") is an enterprise fiind of the City and County of San Francisco ("City") . A five-member 
Port Commission is responsible for its operation, development and maintenance. Commission members are appointed 
by the City's Mayor for terms of four years. The Port is an integral part of the City, and the accompanying financial 
statements are included as a component of the City's Comprehensive Annual Financial Report. 

Prior to February 1969, the Port was owned by the State of California ("State") and administered by the San Francisco 
Port Authority, a State agency. In February 1969, the Port was transferred in trust to the City under the terms and 
conditions specified in the State statutes of 1968, Chapter 1333 ("Burton Act"), as amended, and ratified by the City's 
voters in November 1968. 

Under the tenns of the Burton Act, the State Legislature reserved the right to amend, modify, or revoke, in whole or in 
part, the transfer of lands in trust, provided that the State would then assume all lawful obligations related to such lands. 

The Port* s revenue is derived from both commercial rental and maritime operations. All of the Porf s tenants, and 
substantialty all of its other customers, are located in the City. 

Materials and Supplies 

Materials and supplies are used for construction and inaintenance of Port facilities and are stated at cost, on a first-in, 
first-out basis. 



Property, Plant and Equipment 

Land transferred to the City in February 1969 is stated at an amount which includes an increase over historical cost of 
$56,063,(X)0. This amount was recorded by the State in prior years to reflect appraised values in 1929. The Port's 
management estimates that the fair market value of such land significantly exceeded recorded amounts at the time of 
the transfer. ^ . . » — ■ 

Other property, plant and equipment is carried at cost or at fair market value at the date received in tfie case of property 
received by donation or by termination of a lease. 

Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets. Land 
improvements (principally pavement and railroad tracks) with a cost of approximately $18 million are not depreciated 
because, in the opinion of management, the assets will be maintained to provide indefinite useful lives. Maintenance 
and repairs are expensed as incurred. 

hiterest paid on bond funds used for construction purposes, less interest earned on the temporary investment of the 
proceeds of such tax-exempt borrowings is capitalized fi-om the date of borrowing through the construction period. 




NOTE 2 - CASH AND INVESTMENTS: ^inhpCIIV JQiPriKaViPi « ! 



The Port maintains its cash and investments and a portion of its restricted asset cash and investments as part of the 
City's pool of cash and investments. The City's pool is invested pursuant to investment policy guidelines established by 
the City Treasurer. The objectives of the policy are, in order of priority, preservation of capital, liquidity, and yield. The 
policy addresses soundness of financial institutions in which the City will deposit funds, types of investment instniments 
as permitted by the California Government Code, and the percentage of the portfolio which may be invested in certain 
instruments with longer terms 1i) maturity, hi addition, a City ordinance prohibits deposits and investments with 
financial institutions having specified relations with either the government of South Africa or (pertain private entities 
doing business with or in South Afiica. The Comprehensive Annual Financial Report of the City categorizes the level of 
risk associated with the City's pooled cash and investments. 



At June 30, 1990 and 1989, cash and investments held by trustees include $9,901,000 and $9,934,000. respectively. 
invested in a U.S. Agency government fund. The cost approximates market value and the investments may be with- 
drawn on demand. 

At June 30, 1990 and 1989, lessee deposits held in trust include $637,000 and $536,000. respectively, invested in short 
term, renewable certificates of deposit. The cost approximates market value and Uic deposits are insured and held by 
the Port in its own name. 



I" VP. 




NOTES TO FINANCIAL STATEMENTS 



NQTf..^.:. RECEiyABLES: 



At June 30, 1 990 and 1 989, receivables consisted of: 



Trade accounts receivable 

Less allowance for doubtful accounts . 

City and County of San Francisco Cincluding grants receivable of $2,288 in 1 990) 

Accnied interest receivable 

Accnied revenue and ottier receivables 

Grants receivable 

Federal and state disaster assistance receivable 



1990 

(in thousands) 
$2,324 
124 
2.200 
2,418 
947 
169 
324 
3,148 



1989 

(in thousands) 
$2,370 
181 

. 2,189 
149 
875 
176 



$9,206 



$3,389 



As discussed in Note 12( the federal and state disaster assistance receivable represents the excess of approved federal and 



state assistance relating to the Loma Prieta earthquake over amounts received. 
NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT: 






At June 30, 1 990 and 1 989, properly, plant and equipment consisted of: 






Estimatod 




1990 


1989 


Useful Life 




(in thousands) 


(in thousands) 


(years) 


Land and land improvements 


$112,960 


$112,904 




Buildings, stwdures and related improvements 


161, 7)S 


158,797 


5-59 


Equipment 


3,924 


3,963 


5-25 


Total 


278,602 


, 275,664 




Less accumulated depreciation 


(97,043) 


(92,344) 




Net . ' ' 


181,559 


183,320 




Constwction work in progress 


9.368 


4.029 




Total 


$190,927 


$187,349 . 





Total interest cost was $6,322,000 and $6,503,000 for fiscal years 1990 and 1989, of which $1,764,000 and $2,213,000 was 
capitalized, respectively. Total interest earned was $4,300,000 and $4,598,000 for fiscal years 1990 and 1989, of which 
$1,500,000 and $1,615,000 was capitalized, respectively. 

The cost of ftilly depreciated assets still in use was approximately $53,700,000 and $52,900,000 at June 30, 1990 and 1989, 
respectively. 



NOTES TO FINANCIAL STATEMENTS 



NOTE 5 - ACCpUN^^^ 

At June 30, 1 990 and 1 989, accounts payable and accwed liabilities consisted of: 



Accounts payable ' 
Due to the City and County of San Francisco 
Accwed liabilities 
Accrued payroll and related costs 
Accrued eaittiquake related expenses 




- 1 ooo 

(in thousands) 
$969 
1.194 
558 
2,834 
2,826 




lOfiO 

1 TO" 

(in ttwusands) 
' ' $760 
180 
538 
3.270 






$8,381 . 




$4,748 




NOTE 6 - LONG-TERM DEBT: 












At me ju, 1 7W and 1 7 or, long-term debt consisted ot 


Interest 
Rate 

(%) 


rtscol 
Year Last 
Series 
Matures 


1990 

(in thntKnnm) 


Balance 
1989 

Ci(\ thotKonfk) 




General Obligation Bonds; 

State of California: 

Fm Seawall 1 958, Series B, F, 6 and n 

City and County ofSan Francisco-Horbar Impravement 1 971: 

Series A 

Series B , , 


1.00-4.85 

4.5 - 5.25 
6.0-6.3 


- 

1999 

2003 
2005 


$7,170 

10,400 
6,000 


$8,805 

11.200 
6.400 




Total General Obligation Bonds 
Revenue Bonds: 






23,570 


26.405 




Series /1 1969' 
Series B 1971 
Series C 1984 


7.0-7.2 
5.5 
9.5-11.5 


1999 
2001 
2009 


7,800 
5.950 
42.145 


8.200 
■6.250 
42,325 




Total Revenue Bands ~ 






55.895 


56,775 




Total Debt 






79,465 


83.180 




L6ss: 

Cunent maturities 

Unamortized discount-Revenue Bond Series C 






3,325 
' 1,343 


3,715 
1,444 




Total Lang-Term Debt 






$74,797 


$78,021 





9 



I 



NOTES TO FINANCIAL STATEMENTS 



NOTE 6 - LONG TERM DEBT (CONT.) 

The bonds matvre as follows: 



Year Ending June 30: 
(in thousands) 



State of City and County Revenue 
California of San Francisco Bonds Total 



1991 $1,060 $1,200 $1,065 ' $3,325 

1992 1,055 1,200 1.505 3,760 

1993 1,055 1,200 1,595 3.850 

1994 1,055 -1,200 1,755 4,010 

1995 1,045 1,200 1,925 4,170 
Thereafter 1,900 10,400 48,050 60,350 

$7.170 $16.400 $55,895 $79,465 

The revenue bonds are collateralized by the net revenues of the Port, as defined by the bond resolution, are subordi- 
nated to the general obligation bonds of the State, and are on a parity with any future revenue bonds. The general 
obligation bonds issued by the City^are subordinated to the revenue bonds and any future revenue bonds. 

The revenue bonds require that net revenues .of the Port, as defined, be at least 1.3 times the debt service requirements 
of such bonds for the following twelve months. Certain bond resolutions require that the Port maintain funds for the 
piuTJOse of accumulating assets which are restricted to interest and principal payments. Such resolutions prescribe the 
amounts to be accumulated and the types of seciuities in which the restricted assets may be invested, as discussed in 
Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds may be used for the reconstruction of the 
property or for construction of related property. If the proceeds are not used for those purposes, they must be applied to 
the redemption of bonds as provided in Article III, Port Commission Resolution Number 5231. At both June 30, 1990 and 
1989, restricted capital ouday funds included unexpended fire insurance proceeds of $1,451,000. 



NOTE 7 - OPERATING REVENUES-PROPERTY RENTALS: 



The Port leases property and facilities to others. Hiese leases provide for 30-day cancellation or for retention of 
ownership by the Port at the termination of the agreement Accordingly, all leases are accounted for as operating 
leases. 

Certain of the Porf s property rental agreements specify rental payments based on a percentage of tenant sales, subject 
to a minimum amount Property rental revenues were comprised as follows: 

1990 1989 

(in thousands) (on thousands) 

Minimum rentals > $18,013 $18, 114 

Percentage rentals 3.690 4.238 

$21.703 $22,352 

Minimum future rental income under noncancellable operating leases having terms in excess of one year are as follows: 



Year ending June 30: 


(in thousands) 


1991 


$9,671 


1992 


9.265 


1993 


8.282 


1994 


7.911 


1995 


7.559 


Thereafter 


204.623 


Tohil 


$247,311 



NOTES TO FINANCIAL STATEMENTS 



NOTE 7 - OPERATING REVENUES-PROPERTY RENTALS (CONT.): 

We approximate cost of property subject to operating leases and property field for lease at June 30, 1 990 consisted of: 
Land and Land Improvements 

Buildings, structures, and related improvements (at cost, less accumulated depreciaM of $90,000) 



(in tfiousands) 

$47,000 
65.000 



Total 



$112,000 



NOTE 8 - EMPLOYEE BENEFIT PLANS: 



Retirement Plans: 

a. City and County of San Francisco 

The City has a defined benefit retirement plan (The Plan) which is administered by the San Francisco City and County 
Employees' Retirement System (Retirement System). This note contains condensed information on the Plan. More 
specific information, including ten-year historical trend data which provides information about progress made in 
, accumulating sufficient assets to pay benefits when due, can be found in the financial statements and supplemental 
schedules of the Retirement System. The Plan covers the majority of all full-time employees of the Port along with other 
employees of the City. The Plan provides retirement, death and disability benefits. Benefits are based on specified 
percentages of average final compensation and length of service, with annual cost-of-living adjustments after retirement 

The Plan is financed primarily by (a) contributions from the City, which includes contributions from the Port, (b) 
employee contributions and (c) income from investments. Pension expenditures of the City, including that of the Port, 
are based on rates set by the Retirement Board of the Retirement System. Annual contributions to the Plan are equal to 
amounts accrued for pension expense and include amortization of past service costs through June 30, 2(X)0. 

The latest actuarial valuation of the Retirement System was completed on December 7,1989 by the actuarial firm of 
Milliman & Robertson, Inc. and was based upon employee data and asset information as of June 30, 1989. The significant 
economic assumptions used in the valuation as of June 30, 1989 were an annual return on investments of 8%, an annual 
increase in wages attributable to inflation of 6.5%j^MUiual consumer price indjx increases of 5%, and an expected future 
growth in the number of employees of 0%. 



The following information is presented as a result of this valuation as of June 30, 1989 and includes substantially all City 




(inrnlkns) ^, 
$4,718 



fund groups: 
• Pension benefit obligation 

Net assets available for benefits at cost (market value $3,779) 
Unfunded pension benefit obligation 

The City met the actuarially determined contribution requirements for the years ended June 30, 1990 and 1989. 
Pension costs relating to the-Port were $1,445,000 and $1,311,000 for 1990 and 1989, respectively. 

b. State of California '^l^ ^ J^^iUKF'J^ V? Jf* 

The Port also contributes to the California Public Employees' Retirement System (PERS), an agent nuiitipltM^mployef 
public employee retirement system that acts as a common investment and administrative agent for participating public 
entities within the state of California. Certain employees who commenced their employment at the Port prior to 
February 1969 are eligible to participate in PERS. ^ * »l j-. i . - _ ' I 

Participating employees are required to contribute 7 percent of their salary to PERS. The Port is required to contribiile 
the remaining amounts necessary to fund the benefits for its members, using the actuarial basis recommcudiHi by 
PERS actuaries and actuarial consultants and adopted by the Board of Administration. JB* ' • ■ J 

■^^T ^ — -Sp 4. 

The Port's contributions to PERS totalled approximately $20,000 and $51,000 for 1990 aiui 1989. rosi)ectivcly. The City': 
Office of the Controller Combined Financial Statements contain disclosures for ail covered City eiuployoes. Aniouiils 
for the Port are not separable fi-om the City totals 





NOTES TO FINANCIAL STATCMENTS 



NOTE 8 - EMPLOYED BENEFIT PLANS (CONT.): 



Deferred Compensation Plan: 

The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 
457. The Plan, available to all Port employees, permits them to defer a portion of their salary until future years. 

The amount of assets and related participant obligations for Port employees is not separable from the total City plan. 
The total plan assets and obligations are accounted for in an agency fund of the City and are included in the City's 
Comprehensive Annual Financial Report. The amounts deferred by Port employees totalled $210,000 and $140,000 for 
1990 and 1989, respectively. 

Health Core Benefits—Retired Empoyees: 

The Port provides health care benefits for retired employees. Substantially all of the employees may become eligible for 
these benefits if they reach normal retirement age. Those benefits, and similar benefits for active employees, are 
provided through the City's Health Care System. The Port recognizes the cost of providing the benefits by expensing 
the annual insurance premiums, which were approximately $346,000 and $292,000 for the years ended June 30, 1990 and 
1989, respectively. The cost of providing benefits for the retirees is not separable from the cost of providing benefits for 
the active employees. 



NOTE 9 - RELATED PARTY TRANSACTIONS: 



The Port receives services from„and provides services to, various City departments. The cost of services received, 
included as operating expenses in the financial statements, was approximately $3,500,000 in 1990 and $2,900,000 in 1989. 
Services provided, included in operating revenue, amounted to approximately $572,000 and $584,000 in 1990 and 1989, 
respectively. Receivables and payables relating to such transactions are disclosed in Notes 3 and 5, respectively. 



NOTE 10 • COMMITMENTS AND CONTINGENT LIABILltlES: 



The Port is presently planning various development projects which involve a commitment to expend significant capital 
funds. The Port had firm purchase commitments at June 30, 1990 for approximately $2,569,000 for construction , 
material and services. ^ 

Under a management advisory contract signed in December 1973, the Port transferred its railroad operations to Port 
Railroad, Inc. for a period of twenty years. The contract is cancellable by Port Railroad, Inc. with nine months' .written 
notice. 

The Port is a defendant in various lawsuits; most deal with personal injury or property damage resulting from accident 
or fire and are covered by insurance. In the opinion of counsel the likelihood of an unfavorable outcome is probable in 
some of the suits and, accordingly, accrued liabilities include the aggregate amount of dejductibles.under applicable 
insurance policies. However, a substantial number of the lawsuits are in the discovery stages and counsel to the Port 
cannot express an opinion as to the possible outcome of such litigation. The ultimate resolution of such matters is not 
expected to have a material effect on the Port's financial position or results of operations. 

In December 1985, the Port filed a declaratory relief action requesting the court to determine that the Port had legally 
terminated an agreement with a property developer. The developer cross-complained against the Port, seeking damages 
in excess of $9 million. Counsel to the Port believes the Port will prevail in the case. 

Certain grants that the Port receives are subject to audit and final acceptance by the granting agency based upon their 
review of costs incurred. \ . ^ 

NOTE 1 1 - LITIGATION SETTLEMENT: 



During 1989, a settlement was reached on a suit against the City for salary rate adjustments. As a result of the settle- 
ment, the Port will make retroactive salary payments to those employees affected^ The Port's share, of the settlement 
amounts to $888,000 including interest Payments are being made over a two year period. The expense of the 
settlement and the related liability was included in accrued payroll and related^costs for 1989. 



NOTCS TO FINANCIAL STATCMENTS 



NOTE .1 2 - EARTHQUA^^^^ 

The Port suffiered damage from the Loma Prieta earthquake which occurred October 17, 1989. All damaged property 
and infrastructure have been identified. The Port has estimated the total earthquakerelated damages to be $4,225,000 
which the Port expects to ultimately repafr. To date $1,399,000 has been expended for the year ended June 30, 1990. 
These estimates do not include costs relating to seismic upgrades, retrofitting or other improvements. The diminished 
value of dam.aged property and infrastructure and the liability (projected replacement cost) have been recorded 
accordingly. 

The Port has been granted $4,225,000 in Federal and state emergency assistance of which $1,077,000 has been received ' 
as of June 30, 1990. The Port has recorded a receivable ia the amount of $3,148,000 which represents the amount of 
approved Federal and state assistance which the Port intends to utilize to repair and replace its property 
and infrastructure. 



Credits 



If you wish your name to 
be added to our mailing 
list, please contact: 

Wharf side 
The Port of San 
Francisco 

Ferry Building 

San Francisco, CA 
94111 

(415) 274-0400 
FAX (415) 274-0528 
Telex 275940 PSSUR 

Port Commissioners: 

James R Herman, 
President 

James Bouskos, 
Vice-President 

Dr. Arthur H. Coleman 

Douglas F. Wong 

Anne W. Halsted 



Executive Director: 

Michael P. Huerta 



Editor: 

Wendy Ho Iwata 



Agency Representation: 

JAPAN 

Japan Representative of the 
PSF 

3rd Floor, Fukuhara Building 

No. 4-1 Nihonbashi 
Odenmacho 

Chuoku 

Tokyo 103, Japan 

Telephone: 03-3808-1804 

Telex: USA 7608202 BRCTYO 
UC 

FAX: 03-3808-1800 

TAIWAN 

Grand World Shipping 
Agencies, Ltd. 

Asia Enterprise Center 14/F 
600 Minchuan East Road 
Taipei, Taiwan 
Telephone: (02) 7169555 
Telex: 13072 GRANAGEN 
Telefax: 88602-716-9558 



Design: 

Yamaguma & Associates 



Photography: 

Mark Snyder 
Sharon Beals 
Wendy Ho Iwata 

WHARFSIDE is published 
bi-monthly by the Port 
of San Francisco's 
Government and Public 
Affairs Office. (Veronica 
Sanchez, Govt. & Public 
Affairs Dir.; Wendy Ho 
Iwata, Public Relations 
Mgr.; Tom Gross, 
Mgmt. Asst.). 



US MIDWEST 

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9420 W. Foster Avenue, 
Suite 107 

Chicago, IL 60656 

Telephone:(312) 992-0709 

Telex: 910 2530336 

FAX: (312) 992-1225 



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TTie Port of San Francisco 
Ferry Building, CA 94111 



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Public Library CommTsT! 
Civic Center 
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R T 



I ' 9 9 



A MESSAGE 



[FROM THE PRESIDENT 



The citizens of San Francisco can be proud of what we have accompUshed this year at the 
Port. Striving for excellence, we provide outstanding service to our current customers 
while at the same time working to identify and deal with long-term issues which will 
affect the Port. 

Our strength lies in people with a vision. It's not just the Port staff; it's our customers, all 
the volunteers who serve on the Waterfront Land Use Advisory Board, the city planners, 
the urban designers, the transportation managers, and the citizens of San Francisco — 
particularly those who take time to come to our meetings and participate in the process 
of planning for the future. And our support is not just local: Representative Nancy 
Pelosi has been particularly active in making sure that the message about the economic 
importance of the Port of San Francisco is heard in Washington, and through her efforts 
we have received funding for projects that will benefit the City's fishing industry. We 
also have strong support fi^om our state legislators. Senator Milton Marks, Assembly 
Speaker Willie Brown, and Assemblyman John Burton. 

We were saddened with the passing of one of our leading visionaries. Jack Morrison, 
who served with distinction on the Port Commission from 1976 to 1984 and was an 
instrumental member of the new Waterfront Land Use Advisory Board, died in December. 
We will miss him. 



People w/fh vision... 
that's what makes the 
process work 




As we move toward the 2 1st Century, we must plan a Port that is responsive to the needs 
of all of the diverse communities we serve. Our success will depend on our ability to 
build consensus, to bring everyone together to work towards common goals. We have 
shown that we know how to do this with highly-visible, environmentally-sensitive issues 
such as dredging: We have taken a very active role in the Bay Area Dredging Coahtion 
and the Long-Term Management Study by the Army Corps of Engineers. The results 
have been extremely positive. 

What we do here at the Port of San Francisco has an impact far beyond the city limits. 
As an international gateway for both passenger and cargo traffic, we serve the world. We 
want to do it well, and the plans for improved facihties and the new organization that we 
have in place today will let us do just that. 





James R. Herman 

1991 President, S.F. Port Commission 





EXECUTIVE DIRECTOR'S 



REPORT 



Our Future Success 
Depends On What We 
Are Doing Now 



1991 was a year of building for the Port of San Francisco's future. Collectively, 
Commissioners and staff laid the groundwork for growth of our Port's industries. 

We started construction projects aimed at modernizing our facilities to keep our 
businesses competitive. The long-awaited renovation of fish processing facilities is 
now underway with federal and state grants. A major modernization project for our 
North Container Terminal is ready to begin. 

Work commenced on new landing facilities for commuter ferries next to the Ferry 
Building to handle the region's expected growth in ferry passenger service. 

Setting the foundation for the future goes beyond projects that improve structures. 
It also entails land use planning, efficient staff management and building of partnerships. 

1991 marked the start of a land use planning process to guide the development 
of future maritime and commercial facilities. Port staff and an advisory group of 
business leaders and interested citizens are investing a tremendous amount of time. 
It is a worthwhile investment that will yield a framework for our future activities. 

We changed our organizational structure because in many ways, our old structure 
actually inhibited us from meeting our customers needs. We added new disciplines 
like a regulatory and environmental planning unit to respond to emerging areas 
of port operations. We increased staffing in areas of marketing, promotions and 
leasing to generate new revenues for the Port and the City. 

The change has been a long and painful process for all of us. No one likes change 
and managing a staff transition takes time. But the changes will build a base for 
many years to come. We are strengthening our staff capabilities to serve customers 
and to maintain our financial profitability. 

We are tackling the critical need to locate disposal sites for dredge material through 
a partnership with other Bay Area ports, government agencies, business associations, 
labor unions, and conservation groups. We pioneered the disposal of dredged material 
at a landfill site as a demonstration project for the region's on-going study of 
alternative disposal sites. 

Our new partnership helped us respond to last year's dredging impasse caused by 
concerns over declining Chinook Salmon populations. We adjusted to the stricter 
regulatory climate and revised a maintenance dredging program that enabled us to 
get the job done. 

The process of building and planning that characterized 1991 taught us the art of 
patience. It is now beginning to pay off. As the old saying goes, the best things in 
life come to those willing to wait. 

1991 brought us to new turning points for meeting the challenges of the 21st 
century. I am very pleased with where we have been. I am truly excited about where 
we are going. 




Michael P. Huerta 
Executive Director 




The Reorganizafion 

In 1991, the Port management was reorganized into five new divisions in order to 
provide more direct support to long-term cargo customers and to place new 
emphasis on the unique needs of water-dependent industries such as fishing, ship 
repair, passenger services (cruise hues and excursion vessels) and recreation. 

Cargo Services 

The primary focus of this Division is to attract increased shipping and international 
trade while maintaining a high level of service to existing customers. Target 
markets are primarily shipping lines and, secondarily, shippers and consignees. 

Cargo Services is divided into four operating elements: Customer Service, 
responsible for all day-to-day terminal operations and for billing and collection 
functions; Engineering, providing professional design and costing services for 
ongoing projects; Maintenance, which deals with facilities and equipment and 
marine terminal operations support; and Sales and Marketing, the group which 
researches market trends, identifies potential new and existing markets, provides 
port operations data, manages advertising, and conducts special events. 

Tenant Services 

Tenant Services merges the Property Department with the cruise industry, ferry and 
excursion boat operations, and ship repair industry which were formerly part of 
Maritime Services. This new Division is responsible for negotiating and managing 
all leases, bilHng and collecting all rents and wharfage fees, developing market 
research on industry trends, conducting promotional efforts for both waterside and 
landside facilities, estabHshing fiaison with citizens groups such as the Fisherman's 
Wharf Citizen Action Committee, and assisting tenants with problem resolution. 

Planning and Community Affairs 

This Division is a newly-created group, responsible for the long-term future of 
the Port. Staff members assist the Waterfront Plan Advisory Board, oversee 
environmental regulatory compliance, and manage all major Port development 
projects. The office is divided into planners, city attorneys, managers, engineers, 
and project coordinators. 

Internal Services 

Day-to-day business operations of the Port's internal operations, including 
accounting, personnel, MIS, inventory, and infrastructure maintenance are the 
responsibility of this Division. Internal Services develops and tracks the budget, 
ensures compliance with all City directives, and manages supplies and equipment. 

Executive 

This is the support staff for the Executive Director and the Port as a whole, 
providing expertise in the areas of Legislative Affairs, Press Relations, Financial 
Planning, and Legal Counsel. 




Port Commissioners 
James R. Herman, President 
James M. Bouskos, Vice President 
Dr. Arthur H. Coleman 
Anne W. Hoisted 
Douglas F. Wong 

fxecutrve Director 
Michael P. Huerta 

Port Commission Secretary 
Elizobeth Day 

Cargo Services 
Roger Peter, Director 

Tenant Services 
Michael Jonis, Director 

Planning & Community Affairs 
Keri Lung, Director 

Internal Services 
Jack Conrad, Director 

Office of Legislative Affairs 
and Communication 
Veronica Sanchei 

finance 

Ben Kutnick, Manager 

Legal (City Attorney) 

Jock Pizza, Port Logol Counsel 

Maintenance Coordination 
Maurice Edwards, Superintendent 
Harbor Maintenance 



The Port of San Francisco's container volume has doubled in the last year, making it 
the 14th largest container port in the nation. Marketing efforts are underway to 
maintain the Port's strong position in the market. Intermodal cargo, which accounts 
for 96% of all cargo, remains the Port's highest priority. 

Cargo Operations 

Implementation of Nedlloyd hub operations — ^with as many as four ships in port 
at a time — dramatically increased the Port's cargo tonnage: Liner metric tons grew 
54%, and TEUs jumped 60%. The Port holds a 2 1 % market share of Bay Area 
international hner cargo. 

Destinations in Asia account for 77% of the outbound traffic. South/Central America 
is next at 12%, followed by Austraha/New Zealand (9%), Europe (1%) and other areas 
(1%). Cotton was the Port's #1 export commodity, and this local market, has grown 
steadily over the last three years. The Port handles 46% of all cotton shipped out of 
the Bay Area. 

North-American newsprint remained the Port's #1 import commodity in 1991 
and continues to look strong. CaUfornia's recycled content law, which requires a 
percentage of all newspapers to be printed on recycled paper may open new waste 
paper export opportunities. 

Trade with Latin America can be expected to increase. In March 1991, San Francisco 
was awarded a Coffee Futures Exchange contract allowing importers to sell coffee 
directly to the Exchange, beginning in June 1992. Coffee is the Port's second largest 
commodity, and Nestle Co. estimates the Port can expect up to one miUion additional 
bags of coffee within two years. San Francisco already handles 77% of all Bay area 
coffee and 58% of all west coast coffee imports, up from 45% in previous years. 
Actively exploring potential new markets in Latin America, the Port will sponsor the 
first Bay Area Latin American Trade Fair early in 1992. 

Infrastructure 

The increased cargo activity points up the clear need for improvements to the 
terminal infrastructure; increased throughput capacity is required and pavement 
and electrical repairs are needed. At year end plans were in place for a $6,000,000 
Pier 80 Improvement Project, with bidding scheduled for early 1992. 

The Port Commission approved a land swap in conjimction with the City's Mission 
Bay Project, a new business and residential community in the south waterfront area. 
The swap gives the Port 35 acres of land adjacent to Pier 80 for future expansion of 
cargo terminal facilities. 

Improved freight access to the cargo terminals is the focus of two long-term Cargo 
Services projects: building a railroad bridge across Islais Creek, and improving the 
railroad tunnels to accommodate double-stack trains. 

Dredging 

San Francisco became the first Golden Gate Port to complete a successful upland 
dredging project when 12,000 cubic yards of material from Pier 29's Newsprint 
Terminal was disposed at Redwood Landfill, with temporary storage at Port Sonoma. 
The Port also reduced its annual dredging program for disposal at Alcatraz island to 
respond to growing conservation concerns about Chinook salmon. 

The Port has actively participated in a long-term planning effort spearheaded by a 
multitude of federal, state, and regional agencies that will lead to the designation of 
approved sites for disposal of dredged material. The addition of a Regulatory 
Manager to the Port staff is expected to faciUtate liaison with applicable agencies and 
ensiu-e compliance with all environmental requirements. 



TENANT 



Balancing the needs of a 
diverse set of customers — 
that is the Port's primary role 



Doing business on the waterfront in 1991 was sometimes a challenge. The 
Embarcadero demolition significantly affected parking and traffic, with a sHght 
negative impact on Port revenues. By year end business was almost back to normal. 
In addition to the traditional tenant and lease issues, the Division found itself involved 
in projects to improve ferry services, support and sustain ship repair, accommodate 
excursion boats, and market both the ship repair and cruise industries. 

Property Management 

Ongoing efforts to increase Port revenue and service include increased liaison with 
industry and neighborhood groups, improving collection procedures for dockage 
and wharfage fees, new herring fishing permit procedures, planning long-range 
requirements to support fish-handUng tenants, development of a rent credit poHcy to 
encourage tenant investment in Port Property, and creation of a new leasing group 
which is expected to generate over a million dollars a year in new revenues. 

Rental billings increased by nearly $600,000 in 1991, but parking revenues were down 
slightly due to the Embarcadero demoHtion and ferry terminal improvement projects. 

Development of a cooperative relationship with the City Parking and Traffic Department and 
the added presence of full-time Police Officers at the Port led to improvements in the 
overall traffic flow as well as safety and security of Port property. 

Fisherman's Wharf Projects 

At Fisherman's Wharf water quality problems are being addressed, new bus loading 
zones were created, a landscaping project was completed, planning is underway for a 
petroleum products recycHng program, and a $13.4 million earthquake repair at Pier 
45 has begun. 

Pier 45 repairs include removal and replacement of damaged floors and pavement, 
installation of new utilities, repairs to the seawall and compaction of the soil beneath 
the sheds, sewer repairs, seismic bracing, repairs to damaged building walls and 
foundations, installation of fire-protection systems, and repaving. All facilities will be 
brought up to code. 

When complete, fish-handling facilities will be available in Sheds B and D, and 
parking in Shed A. Final decisions on long-term uses for Shed C will depend on 
further planning and environmental studies, funded, in part, by a $250,000 grant for 
the study of a Fishing and Environmental Institute from the Federal Fisheries 
Promotional Fund. 

Water-dependent Industries 

Ship repair and the cruise industry together generated in excess of three million 
dollars in Port revenue. With more than 35 vessel calls in 1991, passenger traffic was 
up about 5% over previous years, as a result of changing cruise patterns due to the 
Persian Gulf conflict, and a similar increase is expected in 1992. The Port has also 
seen an increase in excursion vessel traffic and is developing new polices to support 
this growing area. 

The Port Commission approved a proposal to create a Ship Repair Training Facility 
in warehouse space available at Pier 70, and, in September, Mayor Art Agnos and 
Supervisor Jim Gonzalez officially laimched the project. The Port will lease the 
building to a newly-created non-profit corporation which will oversee improvements 
to the site and develop and run the training programs in industrial skills areas directly 
related to ship repair. The Port is active in ongoing lease negotiations with the Navy 
to turn the Himters Point Shipyard over to the City. This faciHty will increase the 
Port's competitive position. 






7 



PLANNING 



& COMMUNITY AFFAIRS 



Planning for tomorrow 
takes focus today 




In 1991, Planning and Community Affairs Division received a special "Excellence 
on the Waterfront" Design Award from the nationally-renowned Waterfront 
Center for the Pier 7 public access and fishing pier project. 

The primary focus for the Division has been initiating and supporting the 
Waterfront Plan Advisory Board (see page 10), conducting industry-based market 
research, developing Waterfront Plan materials, and managing ongoing long-term 
projects. 

Scandinavia Center 

In January 1991 the Port Commission granted Scandinavia Center Inc. the right to 
pursue development of a $200 million international cruise terminal and mixed-use 
maritime development on Piers 30-32. SCI plans a cruise passenger terminal 
capable of handling two large ships simultaneously, an exhibition hall, and a 
complex with business, trade, exhibit and cultural facilities. 

In addition, the development will include World Centre, a non-profit educational 
and cultural complex dedicated to the founding principles of the United Nations; 
International Harbor Park, a 100,000 square-foot park to be designed and managed 
by Tivoli Gardens of Copenhagen; a 360-room hotel to be located across the 
Embarcadero; and a marina for visiting yachts. 

The project, which will bring an estimated 2,100 jobs and new annual tax revenues 
in excess of $7.5 million, is being designed by the Scandinavian architectural firm 
Hvidt & Molgaard. SCI is expected to prepare an environmental impact report in 
1992, and construction is expected to begin in 1993. 

Ferry Terminal Projects 

In 1991 ferry services received unprecedented new public support. The Blue and 
Gold Fleet started service to the East Bay and Harbor Bay Marine began developing 
service to southern Alameda. The Port received funding for two separate phases of 
improvements to ferry services. 

Phase I, funded by various Emergency Relief Grants stemming from the Loma 
Prieta earthquake and from City sales taxes, is a $1.9 million project which will allow 
the Port to improve Pier 1/2 ferry passenger access, including that for the disabled. 
Construction is scheduled to be complete in late March or early April 1992 on a new 
trestle gangway, a second ferry dock, a new lighting system, a raised boardwalk, and 
an information kiosk. 



8 



Phase II, recently approved for a grant from the California Transportation 
Commission under the Clean Air Act, is a $5.8 million project for the seismic 
retrofit of the pier. It provides funds for the Port to replace the existing ferry dock, 
upgrade the seawall/pier connection, build terminal facihties, and improve signage 
throughout the Ferry Building area. 

Waterfront Transportation Projects 

Progress continues in the four City-sponsored Embarcadero transit and roadway 
projects. The Port Commission certified final environmental findings on the South 
Embarcadero section of the roadway and Muni-Metro extension projects, allowing 
the City to go to final design. Construction on the section between King and 
Folsom Streets is expected to begin in the summer of 1992. 

Further action on the Muni-Metro Turnback Facility and "F" Line Historic 
Streetcar projects in the central and northern waterfront is expected to be delayed 
pending City decisions on the Embarcadero Freeway Replacement Project. The 
Port is actively participating in this effort since the Ferry Building is expected to be 
the focal point for a possible new pedestrian plaza. 



WATERFRONT PLAN 



ADVISORY BOARD 



Developing a well 
planned, accessible 
waterfront is our 
priority 



When the Port completed its Strategic Plan in 1990, the need for a long-term, 
comprehensive waterfront land-use plan became evident. Proposition H, passed by 
the voters that same year, requires the Port to complete such a plan before proceeding 
with any further commercial development. Early in 1991, a 27-member Waterfront 
Plan Advisory Board was created to assess the current situation, identify long-term 
issues, recommend policies, and assist the Port in the development of the Waterfront Plan. 

The Advisory Board consists of appointees of the Board of Supervisors, the Mayor, 
and the Port Commission, representing city government, regulatory agencies, 
maritime industries, citizen groups, and other Port users. Bob Tufts is the chair. 
The Board held its first meeting in July 1991. 

In 1991, members were given orientation briefings about the Port, regulatory 
processes, past and current projects, and existing waterfront usage. The Advisory 
Board has now moved into the three-phase waterfront planning process outlined below. 

Phase I: Shipping and Water-dependent Industries 

The Advisory Board will begin by examining the land requirements of water-dependent 
waterfront industries, including shipping, fishing, ship repair, passenger service, 
recreational boating, and historic vessels. The process includes a thorough examination 
of existing businesses, the development of industry "profiles," an analysis of growth 
potential for existing and new industries, and identification of collective needs for 
support services and infrastructure. 

"Industrial" and "Commercial and Recreational" sub-committees have been created 
to conduct this review process. This is designed to combine industries with common 
types of needs to facihtate the identification of issues. Committee meetings will 
include presentation of staff research, roundtable discussions with key industry 
representatives, and pubhc discussion. 

Phase II: Other Non-maritime Uses 

Once the Advisory Board has completed their water-dependent industry analysis, the 
focus will turn to other possible uses of Port land. Phase II will focus on land that was 
not reserved for water-dependent uses during Phase I. Opportunities for open space, 
recreational facilities, and general public access will be addressed, as will commercial 
recreation uses such as restaurants, retail, parking, and transportation, and existing 
uses such as offices. It is anticipated that a similar analysis process will be appHed as 
in Phase I. 



Phase III: Integration 

The Waterfront Plan Advisory Board will complete the process by analyzing the two 
components of the preliminary plan produced during Phases I and II. Land use 
recommendations will be evaluated for overall compatibihty, regulatory compliance, 
financial feasibility, and environmental impacts. 

Adjustments will be made, as necessary, to ensure an integrated, well-plarmed, and 
implementable draft land use proposal. The goal is for the final plan to balance the 
needs of the Port tenants and maritime industries, the adjacent neighborhoods, and 
the general pubUc, given the financial and legal reafities of the City and the Port. 

The Waterfront Plan developed from this evaluation process will be submitted to the 
Port Commission for approval. The process is expected to take imtil 1993 to complete. 



10 



m 



i 



Commuted to Attracting 
Increased Shipping And 
International Trade. 





Enhancing organizational 
efficiency, effectiveness 
and employee participation. 



Responsible For 
Creating A Balanced And 
Diverse Waterfront 
Everyone Can Be Proud Of, 
Mindful Of Tradition Wliile 
Looking Toward Tomorrow. 




Committed to the 
development of water 
dependent industries. 



Providing public access 
and recreation. 




financially sound and 
resourceful. 



Providing economic 
benefits. 



w 



iiiiB*i*i'<HMrtli 



INTERNAL 



Efficient management 
means customer 
satisfaction 



For Internal Services, the focus was on reorganization and improving the services 
provided to other Port Divisions and to individual employees. The Division's five 
speciahzed departments provide day-to-day administrative support: 

■ Personnel includes human resource administration, affirmative action/equal 
opportunity, training, and safety programs. 

■ MIS includes systems training, programming support, and hardw^are and database 
administration. 

■ Maintenance keeps up the infi-astructure and public areas. 

■ Business Services includes purchasing, inventory management, mail, and recep- 
tionist services. 

■ Accounting administers accoimts payable, general ledger, revenues, and payroll. 
Human Resource Management 

As part of ongoing efforts to provide economic benefit to the City, the Port continued its 
focus on providing opportunities for small/disadvantaged businesses. During the last fiscal 
year, 48.4% of the Port's available contract dollars went to local minority and women- 
owned firms. 

The Port's Disadvantaged Business Enterprise Program encourages involvement of locally 
owned small firms by requiring developers to break projects into tasks that can be shared 
with small/disadvantaged firms and to report the percentage involvement of such firms 
throughout all projects. 

Oracle Computer Project 

The Port will be installing a new computer system in 1992. The Oracle Relational 
Database Management System of the new DEC "RISC" (reduced instruction system 
code) computer will replace the existing antiquated mini computer system. 

Designed to assist managers, the new system wall streamHne existing operations and 
allow the Port system to link with other City systems, a capabiUty which has been 
unavailable in the past. 

The installation will be accomplished by Oracle Corporation and the Port's MIS staff. 
The new system is expected to be fiilly on-line vdthin two years. 



14 



INDEPENDENT AUDITORS' REPORT 



THE HONORABLE EDWARD HARRINGTON, CONTROLLER, 
CITY AND COUNTY OF SAN FRANCISCO 



We have audited the accompanying balance sheet of the PORT 
COMMISSION, CITY AND COUNTY OF SAN FRANCISCO, 
PORT OF SAN FRANCISCO ("Port") as of June 30, 1991 and 1990, 
and the related statements of operations, equity, and cash flows for the 
years then ended. These financial statements are the responsibility of the 
Port's management. Our responsibiUty is to express an opinion on these 
financial statements based on our audits. 



We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether the financial statements 
are fi-ee of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the 
financial statements. An audit also includes assessing the accounting 
principles used and significant estimates made by management, as well 
as evaluating the overall financial statement presentation. 

We believe that our audits provide a reasonable basis for our opinion. 




In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of the Port as of 
June 30, 1991 and 1990, and the results of its operations and its cash 
flows for the years then ended, in conformity with generally 
accepted accounting principles. 



1 




15 



BALANCE SHEET 

Years Ended June 30. 1 99 1 and 1 990 (in thousands] 



ASSETS 



1991 



1990 



Current Assets: 

Cash and investments, principally in City Treasury • 

Port operating fund 
Receivables 
Materials and supplies 
Prepaid insurance and other assets 

Total Current Assets 

Restricted Assets: 

Cash and short-term investments: 
Capital ouday 

Bond interest and redemption 
Lessee deposits held in trust 

Total Restricted Assets 



$20,343 
7,455 
1,375 
922 

30,095 



12,972 
10,486 
1,800 
25,258 



$21,401 
9,206 
1,418 
887 
32,912 



14,451 
9,901 
1,533 

25,885 



Property, Plant, and Equipment - Net 
Long-Term Receivable 



189,543 
552 



190,927 
493 



TOTAL ASSETS 



$245,448 



$250,217 



LIABILITIES AND EQUITY 
Current Liabilities: 

Accounts payable and accrued liabilities 
Current maturities of long-term debt 
Accrued bond interest payable 

Total Current Liabilities 



$8,997 
3,760 
175 
12,932 



$8,381 
3,325 
195 

11,901 



Payable from Restricted Assets: 

Accrued bond interest payable 
Lessee deposits 
Deferred grants 

Total payable from restricted assets 



2,448 
1,800 
44 



4,292 



2,489 
1,533 
143 

4,165 



Deferred Revenue 

Long-Term Debt - Net of current maturities 

Total Liabilities 



419 



71,138 
88,781 



335 
74,797 
91,198 



Equity: 

Contributed capital 
Revaluation of property 
Retained earnings 

Total Equity 



19,294 
56,063 
81,310 
156,667 



18,156 
56,063 
84,800 
159,019 



TOTAL LIABILITIES AND EQUITY 



$245,448 



$250,217 



16 



The accompanying notes are an integral part of this statement. 



STATEMENT OF OPERATIONS 

Years Ended June 30, 1991 and 1990 (in thousands} 



1991 1990 

Operating Revenues: 

Property rentals - commercial $1 8,880 $16,910 

Property rentals - maritime 6,018 4,793 

Wharfage, dockage, and demurrage 6,983 6,676 

Commercial power 992 869 

Other 251 362 

Total Operating Revenues 33,124 29,610 

Operating Expenses: 

Operations 11,574 10,793 

Maintenance 12,574 10,137 

Depreciation 5,114 4,877 

Commercial power 794 695 

Fire boat operations 1,295 1,309 

Total Operating Expenses 3 1 ,35 1 27,811 

Operating Income 1,773 1,799 

Other Income (Expense): 

Interest income 2,329 2,800 

Interest expense ( 4,479) ( 4,558) 

Earthquake damages and expenses ( 535) ( 4,225) 

Federal and state earthquake assistance 535 4,225 

Litigation settiement ( 3,115) 

Other 2 

Total Other Income (Expense! { 5,263) ( 1,758) 

NET (LOSS) INCOME ($3,490) $41 



STATEMENT OF EQUITY 

Years Ended June 30, 1 99 1 and 1 990 (.n ihoijsarKlsl 



Contributed Revaluation Retained 
Capital of Property Earnings 




Balances as of June 30, 1989^ 

J'i 

Capital grants j 

Net income for the year ended June 30, 1990 

Balances cs^. JI^£^3^1990 

Capital grants — 
Net loss for the year endeJJune 

Balances as June 30, 1 9' 



The accompanying notes are an integral part of this stalsmomi 



1 



17 



STATEMENT OF CASH FLOWS 

Years Ended June 30, 1991 and 1990 (in thousands] 



CASH FLOWS FROM OPERATING ACTIVITIES: 

Operating income 

Adjustments to reconcile operating income to 
net cash provided by operating activities: 
Depreciation 

Provision for uncollectible accoimts 

Net deferral (recognition) of deferred revenue 

Changes in assets and liabihties: 
(Increase) decrease in: 

Receivables 

Materials and supplies 

Prepaid insurance and other assets 
Increase in: 

Accounts payable and accrued habilities 
Nel cash provided by operating activities 



1991 
$1,773 



5,114 
203 
84 



( 558) 
43 

( 35) 

1,310 
7,934 



1990 

$1,799 



4,877 
( 57) 
( 107) 



( 305) 
( 108) 
178 

807 
7,084 



CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: 

Litigation settiement 

Proceeds from disaster assistance 

Earthquake damages and expenses 

Net cash used for noncapital financing activities 



{ 3,115) 
1,009 
( 1,229) 
( 3,335) 



1,077 
( 1,399) 
( 322) 




CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: 

Acquisition and construction of property, plant and equipment 
Capital grants received 
Principal payments on long-term debt 
Interest payments on long-term debt 
Interest income capitalized 
Proceeds on sale of property and eqtiipment 
let cash used for capital financing activities 



CASH FLOWS FROM INVESTING ACTIVITIES: 

Net decrease in restricted cash and investments 
Interest income received 

Net cash provided by investing activities • 
NET DECREASE IN CASH AND CASH EQUIVALENTS 

CASH AND CASH EQUIVALENTS: 

inning of year 



End of year 




( 3,313) 
2,548 
( 3,325) 
{ 6,089) 
1,233 

2 

( 8,944) 



894 

2,393 
3,287 

( 1,058) 



21,401 



$20,343 



( 8,191) 
271 
( 3,715) 
( 6,273) 
1,500 

( 16,408) 



2,140 
2,671 
4,811 



( 4,835) 



26,236 



$21,401 



18 



The accompanying notes are an integral part of this statement. 



NOTES TO FINANCIAL STATEMENTS 



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: 
Organization 

The Port of San Francisco ("Port") is an enterprise fund of the City and County of San Francisco 
("City"). A five-member Port Commission is responsible for its operation, development, and mainte- 
nance. Commission members are appointed by the City's Mayor for terms of four years. The Port is 
an integral part of the City, and the accompanying financial statements are included as a component of 
the City's Comprehensive Annual Financial Report. 

Prior to February 1969, the Port was owned by the State of California ("State") and administered 
by the San Francisco Port Authority, a State agency. In February 1969, the Port was transferred in 
trust to the City under the terms and conditions specified in the State statutes of 1968, Chapter 1333 
("Burton Act"), as amended, and ratified by the City's voters in November 1968. 

Under the terms of the Burton Act, the State Legislature reserved the right to amend, modify, or 
revoke, in whole or in part, the transfer of lands in trust, provided that the State would then assume all 
lawful obUgations related to such lands. 

The Port's revenue is derived firom both commercial rental and maritime operations. All of the 
Port's tenants, and substantially all of its other customers, are located in the City. 

Materials and Supplies 

Materials and suppUes are used for construction and maintenance of Port facilities and are stated 
at cost, on a first-in, first-out basis. 

Property, Plant and Equipment 

Land transferred to the City in February 1969 is stated at an amount which includes an increase 
over historical cost of $56,063,000. This amount was recorded by the State in prior years to reflect 
appraised values in 1929. The Port's management estimates that the fair market value of such land 
significantly exceeded recorded amounts at the time of the transfer. 

Other property, plant and equipment is carried at cost or at fair market value at the date received 
in the case of property received by donation or by termination of a lease. 

Depreciation is computed by use of the straight-line method over the estimated usefiil lives of the 
assets. Land improvements (principally pavement and railroad tracks) with a cost of approximately $18 
milUon are not depreciated because, in the opinion of management, the assets will be maintained to 
provide indefinite useful lives. Maintenance and repairs are expensed as incurred. 

Interest paid on bond funds used for construction purposes, less interest earned on the temporary 
investment of the proceeds of such tax-exempt borrowings, is capitalized fi-om the date of borrowi 
through the construction period. 

Statement of Cash Flows: 

The Port has adopted the provisions of Statement No. 9 of the Governmental Accou 
Standards Board "Reporting Cash Flows of Proprietary . . .Entities That Use Proprietary 
Accounting." Accordingly, the Port has presented a statement of cash flows for the year ended June ?0, 
1991, and has restated the previously issued statement of changes in financial position for the year 
endedjune30, 1990. 

For purposes of the statement of cash flows, all unrestricted cash and highly liquid in\ csuncius 
with maturities of three months or less, when purchased, are considered to be cash fequivalents. 

NOTE 2 - CASH AND INVESTMENTS: , 

The Port maintains its cash and investments and a portion of its restricted asset cash and investments 
as part of the City's pool of cash and investments. The City's pool is invested pursuant to investment 
pohcy guidelines established by the City Treasurer. The objectives of the polic\' are, in order ol priority, 
preservation of capital, Hquidity, and yield. The policy addresses .soundness of financial institiitions in 
which the City will deposit funds, types of investment instninients as permitted by the California 
Government Code, and the percentage of the portfolio which may be invested in certain instruments with 
longer terms to maturity. In addition, a City ordinance prohibits deposits and investments with financial 
institutions having specified relations with either tlie government of South Africa or certain private entities 
doing business with or in South Africa. The Comprehensive /\nnual Financial Report of the Citj' categorizes 
the level of risk associated with the City's pooled cash and investments. 

At June 30, 1991 and 1990, cash and investments held by taistces include $10,486,000 ami $<>.<>01 .000, 
respectively, invested in a U.S. Agency government fund. The cost approximates market value and the 
investments may be withdrawn on demand. 

At June 30, 1991 and 1990, lessee deposits held in trust include $858,000 and $637,000. respectively, 
invested in short-term, renewable certificates of deposit. The cost appro.vimates market value and the i q 

deposits are insured and held by the Port in its own name. _±_2_ 





NOTES TO FINANCIAL STATEMENTS 



NOTE 3 - RECEIVABLES: 

At June 30, 1 99 1 and 1 990, receivables consisted of: 

1991 1990 

f/f) Thousandsl {In Tl^otjsandsl 

Trade accounts receivable $2,988 $2,324 

Less allowance for doubtful accounts 327 124 

2,661 2,200 

City and Cotmty of San Francisco - grants 815 2,288 

City and County of San Francisco - general 32 130 

Accrued interest receivable 824 947 

Accrued revenue and other receivables 161 169 

Grants receivable 288 324 

Federal and state disaster assistance receivable 2,674 3,148 

$7,455 $9,206 



As discussed in Note 12, the federal and state disaster assistance receivable represents the excess 
of approved federal and state assistance relating to the Loma Prieta earthquake over amounts received. 



NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT: 

At June 30, 1 99 ] and / 990. property, plant and equipment 

Land and land improvements 
Buildings, structures and 
related improvements 
Equipment 

Total 

Less accumulated depreciation 

Net 

Construction work in progress 

Total 



isted of: 

Estimated 

1991 1990 Useful Life 

lln thousands) (In thousands) (yeonj 

$113,136 $112,960 

171,341 161,718 5 -59 

3,921 3,924 5 -25 

288,398 278,602 

(101,847) ( 97,043) 

186,551 181,559 

2,992 9,368 

$189,543 $190,927 



Total interest cost was $6,129,000 and $6,322,000 for fiscal years 1991 and 1990, of which $1,650,000 
and $1,764,000 was capitalized, respectively. Total interest earned was $3,562,000 and $4,300,000 for 
fiscal years 1991 and 1990, of which $1,233,000 and $1,500,000 was capitaUzed, respectively. 

The cost of fully depreciated assets still in use was approximately $58,900,000 and $53,700,000 at 
June 30, 1991 and 1990, respectively. 



NOJE 5 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: 

At June 30, 1 99 1 and 1 990, accounts payable and accrued liabilities consisted of: 

1991 1990 

^ (In Thousands) (In Thovsands! 

Accounts payable $1,456 $969 

Due to the City and County of San Francisco 1,744 1,194 

Accrued liabihties 816 558 

Accrued payroll and related costs 2,849 2,834 

Accrued earthquake related expenses 2,132 2,826 

2Q $8,997 $8.381 



NOTES TO FINANCIAL STATEMENTS 



NOTE 6 - LONG-TERM DEBT: 



At June 20, 1 99 1 and 1 990, long-term debt 


consisted of: 










Fiscal 








Interest 


Year Last 




Balance 




Rate 


Series 








(%) 


Matures 


1991 


1990 








(In thousands) 


lln thousands} 


General Obligation Bonds: 










State of California: 










Fifth Seawall 1958, 










Series B, F, G, and H 


1.00-4.85 


1999 


$6,110 


$7,170 


City and County of 










ban l^rancisco - Harbor 










Improvement Iv/l: 










Series A 






V,OUU 


lU,-rUU 


Series B 


o.u-o.i 


/UU5 




o,uuu 


Total General Obligation Bonds 






21,310 


23,570 


Revenue Bonds: 










Series A 1969 


7.0-7.2 


1999 


$7,300 


$7,800 


Series B 1971 


5.5 


2001 


5,625 


5,950 


Series C 1984 


9.5-11.5 


2009 


41,905 


42,145 


Total Revenue Bonds 






54,830 


55,895 


Total Long Term-Debt 






76,140 


79,465 


Less: 










Current maturities 






o,/ou 




Unamortized discount - Revenue Bond Series C 




1,242 


1,343 


Net Long-Term Debt 






$71,138 


$74,797 


The bonds mature as follows: 










Year Ending 




Cifv and 






June 30: 


State of 


County of 


Revenue 




(In thousands) 


California 


San Francisco 


Bonds 


Total 


1992 


$1,055 


$1,200 


$1,505 


$3,760 


1993 


1,055 


1 200 


1 595 


3,850 


1994 


1,055 


1,200 


1,755 


4,010 


1995 


1,045 


1,200 


1,925 


4,170 


1996 


670 


1,200 


2,120 


3,990 


Thereafter 


1,230 


9,200 


45,930 


56,360 


Total 


$6,110 


$15,200 


$54,830 


$76,140 



The revenue bonds are collateralized by the net revenues of the Port, as defined by the bond 
resolution, are subordinated to the general obligation bonds of the State, and are on a parit}' with ;my 
fiiture revenue bonds. The general obligation bonds issued by the City are subordinated to the revenue 
bonds and any future revenue bonds. 

The revenue bonds require that net revenues of the Port, as defined, be at least 1 .3 times the debt 
service requirements of such bonds for the following twelve months. Certain bond resolutions require 
that the Port maintain funds for the purpose of accumulating assets which are restricted to interest and 
principal payments. Such resolutions prescribe the amounts to be accumulated and the t)-pes of securities 
in which the restricted assets may be invested, as discussed in Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds may be used for reconstruction 
of the property or for construction of related property. If the proceeds are not used for those |iiir|)oses, 
they must be applied to the redemption of bonds as provided 

in Article III, Port Commission Resolution Number 5231. ^ ^ ^ ii ^TI T_ a. . 
At both June 30, 1991 and 1990, restricted » ^^-m ^A g ^^^^ If ^ j f ' ^^T ^ ' 

capital outlay funds included unexpended fire 
insurance proceeds of $1,451,000. 




NOTES TO FINANCIAL STATEMENTS 



NOTE 7 - OPERATING REVENUES - PROPERTY RENTALS: 

The Port leases property and facilities to others. These leases provide for 30-day cancellation or 
for retention of ownership by the Port at the termination of the agreement. Accordingly, all leases are 
accoimted for as operating leases. 

Certain of the Port's property rental agreements specify rental payments based on a percentage of 
tenant sales, subject to a minimum amount. Property rental revenues were comprised as follows: 



1991 1990 

(In thousands} iln thousands} 

Minimum rentals $20,898 $18,013 

Percentage rentals 4,000 3,690 

$24,898 $21,703 



Minimum future rental income imder noncancellable operating leases having terms in excess of one 
year are as follows: 



Year ending June 30: 




(In thousands} 




1992 


$11,632 


1993 


10,415 


1994 


9,307 


1995 


8,844 


1996 


8,408 


Thereafter 


207,286 


Total 


$255,892 



The approximate cost of property subject to operating leases and property held for lease at June 30, 
1991 consisted of: 

Itf} thoijsandsl 

Land and Land improvements $47,000 
Buildings, structures, and related improvements 

(at cost, less accumulated depreciation of $90,000) 63,000 



NOTES TO FINANCIAL STATEMENTS 



NOTE 8 - EMPLOYEE BENEFIT PLANS: 
Retirement Plans: 

a. City and County of San Francisco: 

The City has a defined benefit retirement plan (The Plan) which is administered by the San Francisco 
City and County Employees' Retirement System (Retirement System). This note contains condensed 
information on the Plan. More specific information, including ten-year historical trend data which 
provides information about progress made in accumulating sufficient assets to pay benefits when due, can 
be found in the financial statements and supplemental schedules of the Retirement System. The Plan 
covers the majority of all full-time employees of the Port along with other employees of the City. The 
Plan provides retirement, death and disability benefits. Benefits are based on specified percentages of 
average final compensation and length of service, with annual cost-of-Hving adjustments after retirement. 

The Plan is financed primarily by (a) contributions from the City, which includes contributions ft-om 
the Port, (b) employee contributions, and (c) income fi-om investments. Pension expenditures of the City, 
including that of the Port, are based on rates set by the Retirement Board of the Retirement System. Annual 
contributions to the Plan are equal to amounts accrued for pension expense and include amortization of 
past service costs through Jtme 30, 2000. 

The latest actuarial valuation of the Retirement System was completed on December 11, 1990 by the 
actuarial firm of MilHman & Robertson, Inc. and was based upon employee data and asset information as 
of June 30, 1990. The significant economic assumptions used in the valuation were an annual return on 
investments of 8%, an annual increase in wages attributable to inflation of 6%, annual consumer price 
index increases of 5%, and an expected future growth in the number of employees of 0%. 

The following information is presented as a result of this valuation as of June 30, 1990 and includes 
substantially all City fund groups: 

lln Millions! 

Pension benefit obligation $4,973 
Net assets available for benefits at cost (market value $4,2 18) 3,951 
Unfunded pension benefit obUgation $ 1 ,02 2 

The City (including the Port) met the actuarially determined contribution requirements for the years 
ended June 30, 1991 and 1990. Pension costs relating to the Port were $1,381,000 and $1,445,000 for 
1991 and 1990, respectively. 

b. State of California: 

The Port also contributes to the California Public Employees' Retirement System (PERS), an agent 
multiple-employer public employee retirement system that acts as a common investment and admini- 
strative agent for participating public entities within the state of California. Certain employees who 
commenced their employment at the Port prior to February 1969 are eligible to participate in PERS. 

Participating employees are required to contribute 7 percent of their salary to PERS. The Port is 
reqviired to contribute the remaining amounts necessary to fund the benefits for its members, using the 
actuarial basis recommended by PERS actuaries and actuarial consul%tants and adopted by the Board of 
Administration. 

The Port's contributions to PERS totalled approximately $13,000 and $20,000 for 1991 and 1990, 
respectively. The City's Office of the Controller Comprehensive Annual Financial Report contain 
disclosures for all covered City employees. Amounts for the Port are not separable from the City totals. 

Deferred Compensation Plan: 

The City offers its employees a deferred compensation plan created in accordance with Internal 
Revenue Code Section 457. The Plan, available to all Port employees, pennits them to defer a portion of 
their salary until future years. 

The amount of assets and related participant obligations for Port employees is not scparalile from the 
total City plan. The total plan assets and obligations are accounted for in an agency fund of the (. aX)' and 
are included in the City's Comprehensive Annual Financial Report. The amounts deferred by Port 
employees totalled $191,000 and $210,000 for 1991 and 1990, respectively. 

Health Core Benefits - Retired Employees: 

The Port provides health care benefits for retired employees. Substantially all of the employees 
may become efigible for these benefits if they reach normal retirement age. Those benefits, and similar 
benefits for active employees, are provided through the City's Health Care System. The Port recognizes 
the cost of providing the benefits by expensing die annual insurance premiums, which were approximately 

$381,000 and $346,000 for the years ended June 30, 1991 and 1990, respectively. The cost of providing ^ - 

benefits for the retirees is not separable ft"om the cost of providing benefits for the active employees. 



NOTES TO FINANCIAL STATEMENTS 



NOTE 9 - RELATED PARTY TRANSACTIONS: 

The Port receives sennces from, and provides services to, various City departments. The cost 
of services received, included as operating expenses in the financial statements, was approximately 
$3,622,000 in 1991 and $3,500,000 in 1990. Services provided, included in operating revenue, amounted 
to approximately $529,000 and $572,000 in 1991 and 1990, respectively. Receivables and payables 
relating to such transactions are disclosed in Notes 3 and 5, respectively. 

NOTE 10 - COMMITMENTS, LITIGATION AND CONTINGENCIES: 

Commitments 

The Port is presently planning various development projects which involve a commitment to 
e.xpend significant fimds. The Port had firm purchase commitments at June 30, 1991 for approximately 
$5,285,000 for capital projects and $453,000 for general operations. 

Litigation 

The Port is a defendant in various lawsuits; most deal with personal injury or property damage 
resulting from accident or fire and are covered by insurance. In the opinion of counsel the likelihood 
of an unfavorable outcome is probable in some of the suits and, accordingly, accrued liabilities include 
the aggregate amount of deductibles under applicable insurance pohcies. However, a substantial 
number of the lawsuits are in the discovery stages and counsel to the Port cannot ex-press an opinion as 
to the possible outcome of such litigation. The ultimate resolution of such matters is not expected to 
have a material effect on the Port's financial position or results of operations. 

Contingencies 

Certain grants that the Port receives are subject to audit and final acceptance by the granting 
agency based upon their review of costs incurred. 

Under a management ad\isory contract signed in December 1973, the Port transferred its railroad 
operations to Port Railroad, Inc. for a period of twenty years. The contract is cancellable by Port 
Railroad, Inc. with nine months' written notice. 

Concentration of credit risk: The Port leases facilities (commercial and maritime) to businesses, 
substantially aU of which are located in San Francisco. The trade accounts receivable relate to such 
activities. 

NOTE 1 1 - LITIGATION SETTLEMENT: 

In December 1985, the Port filed a declaratory relief action requesting the court to determine that 
the Port had legally terminated an agreement with a property developer. The developer cross- 
complained against the Port, seeking damages in excess of $9 mUUon. In 1991, the Port paid $3 million 
to the developer in settlement of the htigation. The Port also incurred $11 5,000 of legal expenses in 
1991 related to the htigation and settlement. 

NOTE 1 2 - EARTHQUAKE DAMAGES: 

The Port suffered damage from the Loma Prieta earthquake which occurred October 17, 1989. 
All damaged property and infrastructure have been identified. The Port expects to repair all 
earthquake-related damages, which is currently estimated to total $4,760,000. As of June 30, 1991, 
$2,628,000 has been expended. These estimates do not include costs relating to seismic upgrades, 
retrofitting or other improvements. 

The Port has been granted $4,760,000 in Federal and state emergency assistance of which 
$2,086,000 has been received to date. The Port has recorded a receivable in the amount of $2,674,000 
which represents the amount of approved Federal and state assistance w hich the Port intends to utiUze 
to repair and replace its propert)' and infrastructure, less amounts received to date. 




▲ Porf Engineers display 
Pier 7 Design Award 

■4 1992 Whaleboat Races 
honoring Operation 
Desert Storm 



▼ Coming down ... at last 



A N N U A L 



Wharfside 

The Port of San Francisco 
Ferry Building, Suite 3100 
Son Francisco, C A 941 1 1 

ADDRESS CORRECTION REQUESTED 




Bulk Rate 
U.S. Postage 
PAID 

S.F., CA 
Pejtnit No. 9036 



Margaret Walsh 

Government Docuiaents 

SAN Francisco Public Library 

Civic Center 

San Francisco, CA 94102 




Editor: Gretchen Grover • 
Design: Nonci Chin 

Photography: Mark Synder, Gretchen Grover 
Color photograph courtesy of 
San Francisco International Airport 



A MESSAGE FROM THE PRESIDENT 



For the San Francisco Port Commission, 1992 was a year of beginnings, a year of new challenges and 
new projects. 

Two new Commissioners joined us this summer, Francis J. O'Neill, President and CEO of Menlo-O'Neill 
Associates, and Ming Chang-O'Brien, Vice President of Swiss Bank. Both bring to the table soHd interna- 
tional business experience, new perspectives on priorities for the waterfront, and a great deal of energy and 
enthusiasm. 

We said goodbye to Dr. Arthur Coleman, who left the Commission after 12 years, and to President 
James Bouskos. Their legacy remains: Continuing their commitment to open up business opportunities 
for minority and disadvantaged small businesses, the Commission awarded the $7 milHon contract for 
improvements at Pier 80 to a minority joint venture, and the contract to manage special events at Pier 35 
went to Waterfront Productions, a minority-owned business. 

Business development has taken us to the far comers of the globe. Commissioners represented the Port 
in Osaka for the 25th Anniversary of our sister port relationship, walked the halls of Congress seeldng 
support for dredging and ship repair, and ventured to China, Hong Kong, the Phihppines and Taiwan to 
visit long-time customers and generate new contacts. 

We continue to move forward under the concepts of the 1990 Strategic Plan. We approved the $100 
milHon long-term Capital Plan, designed to give the Port the infrastructure necessary to remain competi- 
tive well into the next century. The 1991 staff reorganization plan was funded this fiscal year, a sound 
business decision which increases responsiveness to customer needs. 



We have tackled controversial decisions, always attempting to apply a dose of pragmatism to the process. 
Our diversity becomes our strength as we deal with issues Uke these, as one of us inevitably emerges as a 
consensus-builder, hearing the concerns of all and developing a workable solution. 




EXECUTIVE DIRECTOR'S REPORT 



The Port of San Francisco is, above all, people. The ships, the cranes, the trucks, 
the warehouses, the businesses, and the piers are nothing without the people who 
make them work. The restaurants, stores, offices, marinas, and parks would sit 
empty without people to use and enjoy them. 

Port people range from residents and tourists who are "just visiting" to highly- 
trained, technical professionals performing intricate tasks. They are a diverse 
mixture of colors, creeds, and nationalities, with a wide range of special interests. 
They include the citizens of the Waterfront Plan Advisory Board who are planning 
our future and Friends of the Port, who sponsored a successful series of free public 
boat tours and who continue efforts to educate and inform people about the Port. 

Port people make things happen. In 1992 we created the Port's first Capital Plan, 
we completed the North Ferry Terminal, we supported the first shipyard training 
school, and we broke ground on improvements to the North Container Terminal 
and the Embarcadero. With the reorganization, we hired new staff in leasing, 
marketing, and property management and implemented aggressive programs to 
develop new business. We even weathered the ups and downs of the economy. 

Port people pull together. The threatened state diversion of port revenues and the 
the passage of an anti-gambling bill which directly affects our cruise business 
encouraged us to build coalitions with other Cahfomia ports and maritime indus- 
tries. We continue to work cooperatively with industry, elected officials, and other 
ports to ensure that maritime industry issues such as ship repair subsidies, freight 
transportation projects and dredging are incorporated into national policy as well as 
fimding programs. 

Because people are our greatest asset, in this year's annual report we give you the 
opportunity to see our projects and initiatives through the eyes of the people who 
make them happen. 





2 



i 




DIVISION DIRECTORS 

'My team gives the Poit staff the tools to irork. This 
year, in addtion to routine business suppon, we installed a 
new DEC computer, convened the General Ledgei- system to 
the Oracle system, trained all supervisors in the new peison- 
nel evaluation system, ran the City's Combi?ied Chanties 
Campaign, and maintained, repaired or replaced ovei' 
250,000 square feet of decking and roof surfaces and 42,000 
feet of pile guards and roof gutters. 

Our goals for '93 include expanding efforts to hire 
minority, women-owned and disadvantaged businesses for 
Pon contracts, complet- 
ing the installation of 
the entire Oracle 
financial system, estab- 
lishing WordPerfect as 
the standard word pro- 
cessing system, review- 
ing the Pon's phone 
system, and upgrading 
pier substructures and 
roofs, as time and 
resources permit. " 

Jack Conrad, Director, 
Internal Services 







"Our success with the 
Nedlloyd hub operation 
has proven that we can 
handle intensive, high- 
volume traffic. In '92 we 
embarked on an aggressive 
capital improvement 
program to expand busi- 
ness opponunities for our 
customers and continue 
our high level of service. 
And in July we became 
the nation'' s third coffee 
futures exchange delivery pon — a designation which will offer 
the coffee trade increased opponunities in San Francisco. 

We are excited about the prospects for the future, and we 
plan to take advantage of these opponunities in '93. Following 
up on the first-ever Bay Area Latin America Trade Fair which 
we sponsored in '92, we will expand our Latin American mar- 
keting efforts. Evergreen line will be adding new, larger ships 
this spring, and we seek additional new business in our strong 
markets in the Far East. Rail access improvement projects, 
including the rail bridge connecting the container tenninals and 
the tunnel project continue to be high priorities for the Pon. " 

Roger Peters, Director, Cargo Services 




"/ nitniiiged the design process for 
this project ami, through the construction 
phase, I seive as the admin engineer. 
In addition to handling the routine 
snbniittals and approvals, I act as a 
consulting engineer, responding to 
unforseen conditions vchich develop as 
the project unfolds. It is a constantly 
changing process, and that^s pait of 
ZL'hat 1 like about being involved in pro- 
jects. In addition to the Pier 80 project, 




close coordination benveen the contractor 
and the terminal operator to avoid 
disruptions to cithers schedules. The 
Project vcas designed in phases so that ive 
could work around ship schedules... and 
so far it has been ejfective. We were 
ahead of schedule in November, but with 
nearly a month of rain, things have 
slowed down. How much this will affect 
our target completion date of early 
summer will depend on what happens 
the rest off he winter. 

From an engineering. 'Standpoint 
this project was needed to repair the 
infrastructure, and from the cargo 
vtanagement standpoint this project 
alloVi's us to increase container terminal 
ughput. You might say the Poit is 
getting two projects for the price of one! 
're all proud of the work the Port 
' I'p our customers happy. " 

John Kellogg, Project Engineer, 
d:»> an 





"Fishermiins II 'huifhoih 
7)/ost -d'dl kno-uii tourist dttructious i>i 
the z'orhl. Its z orld-diiss status descn o 
irorld-cbss titteiition. Ifs m\ goal to keep 
mid eiihdiice the true nntiirc of the iinui 
— that mcaiis devotion to fish, the fish- 
iiKi iudustn, uiid the oeobkmbo tisL. . „ 



is a ti-memlom resource ivhich am he 
^ |k covmiercially successful ivhile providing 
^ infonmition, education, and fun for 
millions of people. 

There's so much to do that it is hard 



ronment for all icho 'work and visit the 
area, as ZL-ell as far the zildUfe and sea 
creatures who inhahit the U 'haifand its 
surroundings. As a Bay sii inimcr, 
I ivant to protect irater (juality hy insti- 
tuting a hazardous ivaste and recycling 
program. As A lanager of Fisherman V 
Hlniifl am charged ii ith dealing z ith 
issues related to parking, traffic congc;- 
tion, .s(r///7>)', maintenance and repair, 
trash collection, and management of all 
Port propeities on both land and :i atei: 

Management of Fisherman's llhaif 
IS ii team effort and I have Super Ihnii 
(juality people to help achieve our goals. 
Our purpose is to propel the Whaifintu 
the next century and hack into the hearts 
and minds of the people v:ho have fond 
memories of this famous place. Tbe his- 
toiy, the smells, the sounds of the U'baif 
are ivhat inspiiv me as I make my nam, 
on my ''Whaifmohile^' scooter.^ 

Mandy Joslin, Manager, 
Fisherman's Wharf 




Mandy Joslin, Manager, Fisherman's Wharf 
Time with Port: 6 months 

Previous Experience: Tourist area management and development 
Degree: BA (Business), Central Washington 
Hometown: Seattle, WA 

Philosophy: "Have hjn, do great work." (in that order) 



..^.tt^iJiiiii^ 



MARKETING 



''Marketing maritime iiidustri 
'^ich range from the traditional, bin. 
Lollar imliistiial ivorld of ship repair to 
the glamorous world of inteniational 
cruise lines requires a split personality. 
I have to feel as comfoi table talking to 
a welder working on a ship in diydock 
as I am negotiating with a miise line 
executive. It takes the cooperation of a 
lot of different kinds of people. Vll go 
Just about anywhere to promote the 
Po'itl^ maritime interests. 

The Ship Repair Swvival Plan is 
now in place, working towards re-ener- 
gizing the Poit's repair business. One 
element of that plan, the nation's first 
Shipyard Training Center to be spon- 
sored jointly by the labor unions and 
the shipyards, opened for business in 
September at Pier 10 to train workers 
in shipyard skills including boiler 
maintenance, carpentiy, metal work 
and painting. ''Education on the job'' 
is the buzzword for the future. 

In 1993 the Poit is developing a 
marketing campaign to convince cruise 
lines that San Francisco continues to be 
an attractive poit of call. We are also 
actively suppoiting state legislation in 
favor of gambling on regularly- 
scheduled passenger lines — a bill 
which will comet errors in last year's 
legislation which threatens all our 
fareigiifJag calls. " 



Marceline Therrien 
Market Research Specialist! 




John Leonard, Electrician 

Years with Port: 1 2 

Previous Experience: 30 years 

in the shipyards 
Hometown: San Francisco 
Philosophy: "Here to serve." 



IntroducingWaterfront Promotions 



"iVfy wife Gail and I have been working in special events man- 
agement for more than 25 years. We see Pier 35 as an excit- 
ing, high-potential area for parties, dinners, receptiofis, trade 
shows, festivals, art exhibits, and charity events. The views 
from the upper gallery are among the best along the wate?f-ont, 
and the building has so much space that it provides the creative 
party designer with a veritable cornucopia of 
possibilities. 

San Franciscans love parties and they love the wateifront. Pier 
35 gives them, both. We are excited about the oppottunities that 
this new assignment offers, and we look forward to hosting 
everyone at Pier 35. " 

Wayne Beaubian, Manager, Pier 35 Special Events 




"/;/ this em of reduced finidhig for public projects. 
ji\i,urinjr out hoiv to do more ivith less bus becovie n ivny of 
life. In (idditioii to Indmiciug the niniunl operating budget, 
planning for capital projects — the expensive projects whose 
useful lives span several years — is an ongoing challenge. 
Without a Capital Plan v:e had no clear direction for the 
use of the Port's limited resources. 

Developing the Capital Plan gave us the oppoit unity 
to look at the entire list of projects and to try to make .srn.w 
out of it. We n-vinved, roaluated, and prioritized them all. 
It was a time-consuming and sometimes agonizing process, 
but eveiyone agreed that it was well worth the effort. 

We now have a free-year Capital Plan that includes 
project desm'ptions Justifications, co.^t estiumtes, funding 
sources, and a policy statement on how the whole thing is to 
be nnwaged. And capital planning at the Port has gone 
from a vague idea to a routine process where the Plan is 
updated and approved quaiterly Iry the Poit Commission. 
We designed the process to be adaptable to changing circum- 
stances. The plan will change over time to reflect new needs 
and priorities, but the process should survive. " 
Ben Kutnick, Finance Manager 




Ben Kutnick, Finance Manager 
Years with Port: 1 1 

Previous Experience: City of SF; Leal Electric; 
Spreckels Sugar; RCA; Boise Cascade 
Degree: BS (Accounting), SF State 
Hometown: San Francisco 

Philosophy: "If you can make it work in government, 
it'll work anywhere." 




8 



Pearl Chan, Accounting Manager 

Years with Port: 6 

Previous Experience: 1 6 years with 

City of SF (Controller, Public Administrator/ 

Guardian) 
Degree: BS (Accounting), Golden Gate 
Hometown: Honolulu 
Philosophy: "Trust in people's abilities -- 
they can surprise you in a positive way." 



ORACLE 

''The Pon's is the first City depaitment installing the 
Oracle financial systems. Our General Ledger System was | 
convened to Oracle in November, and we hope to have 
Accounts Payable and Purchasing online in 93. The rest of 
the City will not be online until 1995! i 

Oracle's system is a relational database designed to 
enable all City Depaitments to standardize procedures and 
to talk to each other The benefits come primarily at the 
management level. Managers will be able to get timely, 
accurate data and repoits at a variety of levels. At the 
accounting level, we won't have to type soine documents any\ 
more, but more detailed data entiy will be required. j 

With only General Ledger installed, we don't yet have 
the full picture of how the system is doing. We still have all 
the old subsystems online to provide suppoiting infoiination\ 
My personal challenge throughout this process is making ' 
sure we get it right. Garbage in means garbage out, so 
we're concentrating on quality first. I have a good staff who\ 
is dedicated to making this -work. " ' 

Pearl Chan, Accounting Manager I 



PLANNING 

''As a searWyfor the Planning Division I get 
involved in a variety of projects. I see oar role as uorking 
hand-in-hand iiith consultants and the general public— 
we're the link that tiiivs ideas into actions. 

In my job I deal with the public daily. I anrwer general 
imjiiiries, and Vve noticed that sometimes when people call 
theyre not really sure what they 'want. I can make a dijfer- 
ence. lean listen to what theyre describing and refer them 
to the coirect person or depaitment. I enjoy the inteiface, 
plus it gives me a chance to talk about the Poit. 

Iseroe as the Port Shop Strwardfor Local 790 of the 
Seivice Employees International Union. This job also gives 
me the chance to inteiface with people, to step in and solve 
problems before they get out of hand. Ifs veiy rrwarding. 
Vm so interested in labor relations that I am now working 
tffward a degree in it at Laney College and City College. 

If I could pick one event in 1992 that represents the 
Poii, it would be the ceremony for the signing of the contract 
with the National Shipping Company of the Philippines. 
Employees dressed up in their Philippine fmeiy and paitici- 
pated in the ceremony. It really brought home the fact that we 
have a diverse cultural mixture working here. " 

Patricia Jackson, Secretary 




Pat Jackson, Secretary 
Years With Port: 18 

Previous Experience: Bechtel, Pacific Maritime 
Hometown: Hattiesburg, MS 
Philosophy: "Believe in yourself, but leave room 
for improvement." 




Joe Wyman, Planner 
Years with Port: 3 

Previous Experience: Planner with Berkeley, CA, 

Hardin Corp.; and Austin, TX 
Degree: BA (Government) and MS (Community & 

Regional Planning), Univ. of Texas 
Hometown: Dallas, TX 

Philosophy: "Do unto others as you'd hove them do 
unto you, but check their schedules to make 
sure they're on the same page you ore." 



FERRY TERMINAL 

".Uv mo.'^ memorable accamplishment for 1992 was 
completing phase one of the Sorth Feny Tennimii a 
project 7i •/'/V/' involved CaWrans, the Port Engineering 
Depaitment, and the feny operatoiy. II 'ith this — and the 
marketing efforts by the operatoiy — we\'csecn continued 
gro-wth in the number of all types of feny ptmengay. The 
y letropolitan Transportation Commission {\ ITC) appnrccd 
a Regional Feny Plan this fall which outlines some of the 
transpoitation programs and capital dii elopments nccess4ti 
in the ne.vt 10 yeaiy. I became a financier ami mul the 
.1 IT(.' Plan to help obtain more than S6 million in nrw 
funding. 1 1 e nov: have the chance to complete the iioiih 
terminal facilities and examine metlmls for linking the 
noith terminal with Feny Plaz^i, on a long term giuil of the 
Poll, restoration of the Fenj Building. 

One of the exciting things aiming out of the MIX.' PLin 
is a focus on regional cooperation and axation of a ivmhiiud 
"identity'^' for all Bay . Ireafciry opcttitoty. . in opfnitm . 
coihoitium Z'ill begin ' . ' • ■ ,,f 

issues, and our Wharfi,.^.. ...... 

operatoiy to identijy and nsolve pitHcim. Ihiivrs anr m 
coiitivl, .w mayk I can .fiieak off fin- a little sai! 

Joe Wyman, Project Manager . 



IS going well, nlthoiigh somethm's it seems too 
siou. lie have finished the easy pa it of the process... the 
maritime uses fall naturally into place. The meaty — and 
sometimes perhaps controversial issues — are yet to come. 
Until v:e get into those discussions it is really hard to predict 
the final outcome. Vd like to see a good plan that the public 
ivill love. " 

Bob Tufts, Chairman, Waterfront Plan Advisory Board 




"/ see my role in this process as that of facilitator 
and technical suppoit person to help produce a plan that 
we're proud to be a pan of and one which can be iinple- 
inented. As facilitator iny job is to make sure that all 
the varied viewpoints of this diverse group are heard, 
and that any conflicts get resolved and consens^us is 
reached. Public outreach is also my responsibility — 
to ensure that eveiyone gets a chance to paiticipate 
in the planning process. 

In tenns of technical support, in addition to produc- 
ing the materials for the Board, I see myself as provid- 
ing a link with reality. We have to take note of what 
exists now and what is developing as we design for the 
future, paiticularly since there are a number of other 
groups simultaneously working on planning City 
projects on and near Poit property. " 
Piqn^ Qshimq, Project Coordinator 




The Waterfront Plan Advisory Board (WPAB), which was 
created in July 1991, consists of 27 appointees of the Board 
of Supervisors, the Mayor and the Port Commission. 
Members represent government, industries, neighborhood 
groups, environmental concerns. Port tenants and Port 
users. 

The WPAB was chartered to examine the current situ- 
ation, identify long term issues, and make poUcy recom- 
mendations for waterfront land uses in areas under Port 
jurisdiction. Although Hunter's Point is not included in the 
area to be examined, WPAB members have had preUminary 
discussions about the area and are working informally with 
the Hunter's Point Citizens Advisory Committee. 

A three-phase process is being conducted: Phase I, 
which was completed in late 1992, concentrated on water- 
dependent maritime industries and land uses. 





Phase n, which is now underway, will identify the types 
of non-maritime uses that should be located along the 
waterfront. At the end of each of these phases, land uses 
will tentatively be designated for specific waterfront areas. 
During Phase HI, the WPAB will integrate these prelimi- 
nary designations, conduct a financial and economic impact 
analysis, and evaluate the recommendations for compatibil- 
ity, regulatory compHance, and environmental impact. 

The draft Waterfront Plan will go through a pubHc 
review process before being submitted to the Port 
Commission for adoption. Target date for completion of 
the process is by the end of fiscal year 1993-94. 




PHASE 1 REPORT 

During Phase I Planning tentative land use designations 
were made for the following maritime uses: 

■ cargo related uses 

■ fishing related uses 

■ recreational boating and water uses 

■ ferry and excursion boat uses 

■ ship repair uses 

■ passenger cruise uses 

■ historic ship uses 



Copies of the report on maritime land uses may be 
obtained by writing WPAB, Port of SF, 3 100 Ferry Bldg. 
SF.CA 94111. 



INDEPENDENT AUDITORS' REPORT 



12 




THE HONORABLE EDWARD HARRINGTON, CONTROLLER, 
CITY AND COUNTY OF SAN FRANCISCO 



We have audited the accompanying balance sheet of the PORT 
COMMISSION, CITY AND COUNTY OF SAN FRANCISCO, 
PORT OF SAN FRANCISCO ("Port") as of June 30, 1992 and 1991, 
and the related statements of operations, equity, and cash flows for the 
years then ended. These financial statements are the responsibility of 
the Port's management. Our responsibility is to express an opinion on 
these financial statements based on our audits. 

We conducted our audits in accordance with generally accepted auditing 
standards. Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the 
financial statements. An audit also includes assessing the accounting 
principles used and significant estimates made by management, as well 
as evaluating the overall financial statement presentation. We believe 
that our audits provide a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of the Port as of 
June 30, 1992 and 1991, and the results of its operations and its cash 
flows for the years then ended, in conformity with generally 
accepted accounting principles. 



Hood and Strong 
Tomei and Chu 

October 1, 1992 
San Francisco, CA 








J 




ASSETS 



Current Assets: 

!ash and investments, held in the City Treasury - 

Port operating fund 
eceivables 
Materials and supplies 
Prepaid insurance and other assets 

Total Current Assets ^. 



Restricted Assets: 

Cash and short-term investments: 
Capital outlay 

Bond interest and redemption 
Lessee deposits held in trust 

Total Restricted Assets 

Property, Plant, and Equipment - Net 
Long-Term Receivable 




1992 



$19,966 
8,889 
1,453 
918 
31,226 



1 2,000 
10,241 
1,784 

24,025 

187,123 
605 



BALANCE SHEET 

Years Eroded June 30, 1992 and 1991 (in thousands] 

1991 



$20,343 
7,455 
1,375 
922 

30,095 



12,972 
10,486 
1,800 

25,258 

189,543 

552 




TOTAL ASSETS 



$242,979 



S245,448 



LIABILITIES AND EQUITY 



Current Liabilities: 

Accounts payable and accrued liabilities 
Current maturities of long-term debt 
Accrued bond interest payable 

Total Current Liabilities 



ayable from Restricted Assets: 

Accrued bond interest payable 
Lessee deposits 
Deferred grants 

Total payable from restricted assets 



Deferred Revenue 

Long-Term Debt - Net of current maturities 

Total Liabilities 

Equity: 

Contributed capital 
Revaluation of property 
Retained earnings 

Total Equity 

TOTAL LIABILITIES AND EQUITY 




accompanying notes are an integral part of ttiis statement. 



$7,819 
3,575 
153 
1 1 ,547 



$8,997 
3,760 
175 



12,932 



2,385 
1,784 
75 



4,244 



321 



67,387 
83,499 



2,448 
1,800 
44 



4,292 




419 



71,138 



88,781 



20,132 
56,063 
83,285 



159,480 



19,294 
56.063 
81,310 



156,667 



$242,979 



$245,448 



IS 



STATEMENT OF OPERATIONS 

Years Ended June 30. 19Q2 and 1991 (in thousands] 



Operating Expenses: 

Operations 

Maintenance 

Depreciation 

Commercial power 

Fire boat operations 

Total Operating Expenses 
Operating Income 



Other Income (Expense): 

Interest income 
Interest expense 

Earthquake damages and expenses 
Federal and state earthquake assistance 
Litigation setdement 
Other 

Total Other Income (Expense) 

NET INCOME (LOSS! 





1992 


1991 


Operating Revenues: 






Property rentals - commercial ^^^^^ 


$18,549 


$18,880 


Property rentals - maritime 


6,288 


6,018 


Wharfage, dockage, and demurrage 


7,721 


6,983 


Commercial power 


^^^Bltfi***''*** 989 


992 


Other 'im0^ 


435 


251 


Total Operating Revenues 


-^Mili 33,982 


33,124 




4,211 



2,147 
( 4,383) 
( 1,757) 

1,757 



( 2,236) 



$1,975 



11,574 
12,574 



5,114 




( 5,263) 



($3,490) 



STATEMENT OF EQUITY 

Years Ended June 30. 1 992 and 1 99 1 (in thousands) 




Balances as of June 30, 1 990 



Capital grants 

Net loss for the year ended June 30, 1991 




Contributed Revaluation Retained Total 
Capital of Property Earnings Equity 

$18,156 $56,063 $84,800 $159,019 



1,138 



1,138 

( 3,490) ( 3,490) 



Balances as of June 30, 1991 

Capital grants 

Net income for the year ended June 30, 1992 



19,294 
838 



56,063 



81,310 156,667 



1,975 



838 
1,975 



Balances as June 30, 1992 



$20,132 $56,063 $83,285 $159,480 



14 



STATEMENT OF CASH FLOWS 

Years Ended June 30, 1992 and 1991 (in mousanasi 




CASH FLOWS FROM OPERATING ACTIVITIES: 

Operating income 

Adjustments to reconcile operating income to 
net cash provided by operating activities: 
epreciation 
Provision for uncollectible accounts 
Net deferral (recognition) of deferred revenue 



1992 



$4,211 



4,644 
83 

( 98) 



1991 



$1,773 



5,114 
203 
84 



Changes in assets and liabilities: 
(Increase) decrease in: 

Receivables 

Materials and supplies 
^ Prepaid insurance and other assets 
Increase in: 

Accounts payable and accrued Uabilities 
Net cash provided by operating activities 



( 990) 
( 78) 
4 

( 2,473) 
5,303 



( 558) 
43 

( 35) 

1,310 
7,934 





I 



CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: 

Litigation settlement 

Proceeds from disaster assistance 

Earthquake damages and expenses 

Net cash provided by (used for) noncapital financing activities 

CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: 

Acquisition and construction of property, plant and equipment 

Capital grants received 

Principal payments on long-term debt 

Interest payments on long-term debt 

Interest income capitahzed 

Proceeds on sale of property and equipment 

Net cash used for capital financing activities 

CASH FLOWS FROM INVESTING ACTIVITIES: 

Net decrease in restricted cash and investments 
Interest income received 

Net cash provided by investing activities 

NET DECREASE IN CASH AND CASH EQUIVALENTS 

CASH AND CASH EQUIVALENTS: 

Beginning of year 

End of year 



782 
( 462) 
320 



( 1,690) 
1,183 
( 4,035) 
( 5,884) 
981 

( 9,445) 



1,217 
2,228 
3,445 



( 377) 



20,343 



$19,966 



( 3,115) 
1,009 
( 1,229) 
( 3,335) 



( 3,313) 
2,548 
( 3,325) 
( 6,089) 
1,233 

2. 

( 8,944) 



894 
2.393 

3.287 

( 1,058) 



21.401 



s:o.u3 




The accompanying notes are an integral part of this statement. 



15 



NOTES TO FINANCIAL STATEMENTS 




NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: 



Organization 

The Port of San Francisco ("Port") is an enterprise fund of the City and County of San Francisco 
("City"). A five-member Port Commission is responsible for its operation, development, and mainte- 
nance. Commission members are appointed by the City's Mayor for terms of four years. The Port is 
an integral part of the City, and the accompanying financial statements are included as a component of 
the City's Comprehensive Annual Financial Report. 

Prior to February 1969, the Port was owned by the State of California ("State") and administered 
by the San Francisco Port Authority, a State agency. In February 1969, the Port was transferred in 
trust to the City under the terms and conditions specified in the State statutes of 1968, Chapter 1333 
("Burton Act"), as amended, and ratified by the City's voters in November 1968. 

Under the terms of the Burton Act, the State Legislature reserved the right to amend, modify, or 
revoke, in whole or in part, the transfer of lands in trust, provided that the State would then assume all 
lawful obligations related to such lands. 

The Port's revenue is derived Irom both commercial rental and maritime operations. All of the 
Port's tenants, and substantially all of its other customers, are located in the City. 

Materials and Supplies 

Materials and supplies are used for construction and maintenance of Port facilities and are stated 
at cost, on a first-in, first-out basis. 



Property, Plant and Equipment 

Land transferred to the City in February 1969 is stated at an amount which includes an increase 
^ over historical cost of $56,063,000. This amount was recorded by the State in prior years to reflect 
appraised values in 1929. The Port's management estimates that the fair market value of such land 
significantly exceeded recorded amounts at the time of the transfer. 

Other property, plant and equipment is carried at cost or at fair market value at the date received 
in the case of property received by donation or by termination of a lease. 

Depreciation is computed by use of the straight-line method over the estimated useful lives of the 
assets. Land improvements (principally pavement and railroad tracks) with a cost of approximately 
$18 million are not depreciated because, in the opinion of management, the assets will be maintained to 
provide indefinite useful lives. Maintenance and repairs are expensed as incurred. 

Interest paid on bond funds used for construction purposes, less interest earned on the temporary 
investment of the proceeds of such tax-exempt borrowings, is capitalized from the date of borrowing 
through the construction period. 



Statement of Cash Flows: 

For purposes of the statement of cash flows, all unrestricted cash and highly liquid investments 
with maturities of three months or less, when purchased, are considered to be cash equivalents. 



NOTE 2 - CASH AND INVESTMENTS: 



The Port maintains its cash and investments and a portion of its restricted asset cash and investments 
as part of the City's pool of cash and investments. The City's pool is invested pursuant to investment 
pohcy guidelines established by the City Treasurer. The objectives of the policy are, in order of priority, 
preservation of capital, liquidit}', and yield. The pohcy addresses soundness of financial institutions in 
which the City will deposit funds, types of investment instruments as permitted by the California 
Government Code, and the percentage of the portfolio which may be invested in certain instruments with 
longer terms to maturity. In addition, a City ordinance prohibits deposits and investments with financial 
institutions having specified relations with either the government of South Africa or certain private entities 
doing business with or in South Africa. The Comprehensive Annual Financial Report of the City categorizes 
the level of risk associated with the City's pooled cash and investments. 

At June 30, 1992 and 1991, cash and investments held by trustees include $10,241,000 and $10,486,000, 
respectively, invested in a U.S. Agency government fund. The cost approximates market value and the 
investments may be vdthdrawn on demand. 

At June 30, 1992 and 1991, lessee deposits held in trust include $970,000 and $858,000, respectively, 
invested in short-term, renewable certificates of deposit. The cost approximates market value and the 
deposits are insured and held by the Port in its own name. 



16 



NOTES TO FINANCIAL STATEMENTS 



NOTE 3 - RECEIVABLES: 

At June 30, 1992 and 1991 , receivables consisted of: 

1992 1991 

fin thousands} lln thousands} 

Trade accounts receivable $3,902 $2,988 

Less allowance for doubtful accounts 410 327 

3/492 2,661 

City and County of San Francisco - grants 815 

City and County of San Francisco - general 114 32 

Accrued interest receivable 690 824 

Accrued revenue and other receivables 1 55 161 

Grants receivable 789 288 

Federal and state disaster assistance receivable 3,649 2,674 

$8,889 $7,455 



As discussed in Note 12, the federal and state disaster assistance receivable represents the excess 
of approved federal and state assistance relating to the Loma Prieta earthquake over amounts received. 



NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT: 

At lune 30. 1 992 and 1991 , property, plant and equipment consisted of: 

Estimated 
Useful Life 

rfents} 

Land and land improvements 
Buildings, structures and 

related improvements 171,352 171,341 5 -59 

Equipment 4,149 3,921 5 -25 

Total 

Less accimiulated depreciation 

Net 

Construction work in progress 

Total 



1992 


1991 


lln thousands} 


(In thousands) 


$113,136 


$113,136 


171,352 


171,341 


4,149 


3,921 


288,637 


288,398 


(106,325) 


(101,847) 


182,312 


186,551 


4,811 


2,992 


$187,123 


$189,543 



Total interest cost was $5,898,000 and $6,129,000 for fiscal years 1992 and 1 991 , of which $1,51 5,000 
and $1,650,000 was capitalized, respectively. Total interest earned was $3,128,000 and $3,562,000 for 
fiscal years 1992 and 1991, of which $981,000 and $1,233,000 was capitalized, respectively. 

The cost of fully depreciated assets still in use was approximately $65,700,000 and $58,900,000 at 
June 30, 1992 and 1991, respectively. 



NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: 

At June 30, 1 992 and 1991 , accounts payable and accrued liabilities consisted of: 





1992 


1991 




(In ihovxindi} 




Accounts payable 


$1,052 


$1,456 


Due to the City and County of San Francisco 


426 


1,744 


Accrued liabilities 


846 


Sk) 


Accrued payroll and related costs 


2,068 


2.849 


Accrued earthquake related expenses 


3,427 


2.132 




$7,819 


$8,997 




17 



NOTES TO FINANCIAL STATEMENTS 



NOTE 6 - LONG-TERM DEBT: 

At June 30, 1 992 and 1991, long-term debt consisted of: 

Interest 
Rate 

(%) 



General Obligation Bonds: 

State of California: 

Fifth Seawall 1958, 
Series F, G, and H 

City and County of 

San Francisco - Harbor 

Improvement 1971: 
Series A 
Series B 

Total General Obligation Bonds 




Fiscal 
Year Last 
Series 
Matures 



2.50-4.85 1999 



Revenue Bonds: 

Series A 1969 
Series B 1971 
Series C 1984 

Total Revenue Bonds 
Total Long Term-Debt 

Less: 

Current maturities 
Unamortized discount 



4.5-5.25 
6.3 



7.2 

5.5 
9.5-11.5 



2003 
2005 



1999 
2001 
2009 



Revenue Bond Series C 



1992 

(In ihousondsl 



$5,055 



8,800 
5,200 

19,055 



6,700 
5,000 
41,350 
53,050 
72,105 



3,575 
1,143 



Balance 



1991 

(In thousandsl 



$6,110 



9,600 
5,600 

21,310 



7,300 
5,625 
41,905 
54,830 

76,140 



3,760 
1,242 



Net Long-Term Debt 



$67,387 



$71,138 



The bonds mature as follows: 



Year Ending 
June 30: 

(In ihousandsj 


State of 
California 


City and 
County of 
San Francisco 


Revenue 
Bonds 


Total 


1993 


1,055 


1,200 


1,320 


3,575 


1994 


1,055 


1,200 


1,755 


4,010 


1995 


1,045 


1,200 


1,925 


4,170 


1996 


670 


1,200 


2,120 


3,990 


1997 


660 


1,200 


2,455 


4,315 


Thereafter 


570 


8,000 


43,475 


52,045 


Total 


$5,055 


$14,000 


$53,050 


$72,105 



The revenue bonds are collateralized by the net revenues of the Port, as defined by the bond 
resolution, are subordinated to the general obligation bonds of the State, and are on a parity with any 
future revenue bonds. The general obligation bonds issued by the City are subordinated to the revenue 
bonds and any future revenue bonds. 

The revenue bonds require that net revenues of the Port, as defined, be at least 1.3 times the debt 
service requirements of such bonds for the following twelve months. Certain bond resolutions require 
that the Port maintain funds for the purpose of accumulating assets which are restricted to interest and 
principal payments. Such resolutions prescribe the amounts to be accumulated and the types of securities 
in which the restricted assets may be invested, as discussed in Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds may be used for reconstruction 
of the property or for construction of related property. If the proceeds are not used for those purposes, 
they must be applied to the redemption of bonds as provided in Article III, Port Commission Resolution 
Number 5231. At both June 30, 1992 and 1991, restricted capital outlay funds included unexpended fire 
insurance proceeds of $1,451,000. 



18 



NOTES TO FINANCIAL STATEMENTS 



NOTE 7 - OPERATING REVENUES - PROPERTY RENTALS: 

The Port leases property and facilities to others. These leases provide for 30-day cancellation or 
for retention of ownership by the Port at the termination of the agreement. Accordingly, all leases are 
accounted for as operating leases. 

Certain of the Port's property rental agreements specify rental payments based on a percentage of 
tenant sales, subject to a minimum amount. Property rental revenues were comprised as follows: 



1992 1991 

(In thousands) (In thousands) 

Minimum rentals $21,453 $20,898 

Percentage rentals 3,384 4,000 

$24,837 $24,898 



Minimiun future rental income under noncancellable operating leases having terms in excess of one 
year are as follows: 



Year ending June 30: 




(In thousands) 




1993 


$ 9,654 


1994 


9,337 


1995 


8,951 


1996 


8,544 


1997 


8,202 


Thereafter 


200,443 


Total 


$245,131 



The approximate cost of property subject to operating leases and property held for lease at June 30, 



1992 consisted of: 



Land and Land improvements 

Buildings, structures, and related improvements 

(at cost, less accumulated depreciation of $98,000) 



lln thousondsl 

$47,000 
59,000 



Total 



$106,000 



mm* 

NOTE 8 - EMPLOYEE BENEFIT PLANS: 
Retirement Plans: 
a. City and County of San Francisco: 

The City has a defined benefit retirement plan (The Plan) which is administered by the San I'Vancisco 
City and County Employees' Retirement System (Retirement System). This note contains condcnsctl 
information on the Plan. More specific information, including ten-year historical trend data which 
provides information about progress made in accumulating sufficient assets to pay benefits when ilue, 
can be found in the financial statements and supplemental schedules of the Retirement System. The Plan 
covers the majority of all full-time employees of the Port along with other employees of the C.\t)\ The 
Plan provides retirement, death and disability benefits. Benefits are based on specified pcrcciuages ol 
average final compensation and length of service, with annual cost-of-living adjustments after retirement. 

The Plan is financed primarily by (a) contributions from the City, which includes contributions from 
the Port, (b) employee contributions, and (c) income from investments. Pension expcniliturcs ot the (!ity, 
including that of the Port, are based on rates set by the Retirement Board of the RcrireniciU System. Annual 
contributions to the Plan are equal to amounts accrued for pension expense and inckiilc amortization ot jiast 
service costs through June 30, 2000. 

In November 1991 the voters approved proposition A, "The Early Retirement Program." Under the 
program, three years of age and tiiree years of service were added when calculating tiie service rctii entcnt 
benefits for all miscellaneous members who elected to retire during the perioti I'chruary 1, I9<J2 through 
March 30, 1992. Approximately 1,800 City and County employees retiretl under the program. 




19 



NOTES TO FINANCIAL STATEMENTS 



NOTE 8 - EMPLOYEE BENEFIT PLANS: (Continued) 




The latest actuarial valuation of the Plan was completed in February 1992 by the actuarial firm of 
Towers Perrin and was based upon employee data and asset information as of June 30, 1991. The signifi- 
cant economic assumptions used in the valuation were an annual return on investments of 8%, an annual 
increase in wages attributable to inflation of 6%, annual consumer price index increases of 5%, and an 
expected future growth in the number of employees of 0%. 

The following information is presented as a result of this valuation as of June 30, 1991 and includes 
substantially all City fund groups: 

(In Millions! 

Pension benefit obligation $5,179 
Net assets available for benefits at cost (market value $4,630) 4,393 
Unfunded pension benefit obligation $ 786 



The impact of The Early Retirement Program will be reflected in the pension benefit obligation as of 
June 30, 1992, which will be disclosed in the June 30, 1993 financial statements. 

The City (including the Port) met the actuarially determined contribution requirements for the years 
ended June 30, 1992 and 1991. Pension costs relating to the Port were $1,195,000 and $1,381,000 for 1992 
and 1991, respectively. 

b. State of California: 

The Port also contributes to the California Public Employees' Retirement System (PERS), an agent 
multiple-employer public employee retirement system that acts as a common investment and admini- 
strative agent for participating public entities within the state of California. Certain employees who 
commenced their employment at the Port prior to February 1969 are eligible to participate in PERS. 

Participating employees are required to contribute 7 percent of their salary to PERS. The Port is 
required to contribute the remaining amounts necessary to fund the benefits for its members, using the 
actuarial basis recommended by PERS actuaries and actuarial consultants and adopted by the Board of 
Administration. 

The Port's contributions to PERS totalled approximately $10,000 and $13,000 for 1992 and 1991, 
respectively. The City's Office of the Controller Comprehensive Annual Financial Report contain 
disclosures for all covered City employees. Amounts for the Port are not separable from the City totals. 

Deferred Compensation Plan: 

The City offers its employees a deferred compensation plan created in accordance with Internal 
Revenue Code Section 457. The Plan, available to all Port employees, permits them to defer a portion of 
their salary until future years. The deferred compensation is not available to employees until termination, 
retirement, death or unforeseeable emergency. 

All amounts of compensation deferred under this plan, all property and rights purchased with those 
amounts, and income earned (until paid or made available to the employee or other beneficiary) are solely 
the property and rights of the City and County, subject only to the claims of the City and Count\''s general 
creditors. Participants' rights under the deferred compensation plan are equal to those of general creditors of 
the City and County in an amount equal to the fair market value of the deferred account for each participant. 

The amount of assets and related participant obligations for Port employees is not separable from the 
total City plan. The total plan assets and obligations are accounted for in an agency fund of the City and 
are included in the City's Comprehensive Annual Financial Report. The amounts deferred 
by Port employees totalled $199,000 and $191,000 for 1992 and 1991, respectively. 

Health Care Benefits - Retired Employees: 

Health care benefits of Port employees, retired employees and surviving spouses are financed by 
beneficiaries and by the City and County through the City and County of San Francisco Health Service 
System, a nonexpendable trust fund. The Port's contribution, which amounted to approximately $448,000 
and $381,000 in fiscal years 1992 and 1991, respectively, is determined by Charter provision based on 
similiar contributions made by the ten most populous counties in California. The cost of providing 
benefits for the retirees is not separable from the cost of providing benefits for the active employees. 
The Port's liability for both current employee and post retirement health care benefits is limited to its 
annual contribution. 



20 



NOTES TO FINANCIAL STATEMENTS 



NOTE 9 - RELATED PARTY TRANSACTIONS: 

The Port receives services from, and provides services to, various City departments. The cost 
of services received, included as operating expenses in the financial statements, was approximately 
$3,622,000 in 1991. Services provided, included in operating revenue, amounted to approximately 
$570,000 and $529,000 in 1992 and 1991, respectively. Receivables and payables relating to such 
transactions are disclosed in Notes 3 and 5, respectively. 

NOTE 10 - COMMITMENTS, LITIGATION AND CONTINGENCIES: 
Commitments 

The Port is presently planning various development projects which involve a commitment to 
expend significant ftinds. The Port had firm purchase commitments at June 30, 1992 for approximately 
$7,952,000 for capital projects and $1,529,000 f or general operations. 

Litigation 

The Port is a defendant in various lawsuits; most deal with personal injury or propert}' damage 
resulting from accident or fire and are covered by insurance. In the opinion of counsel the likelihood 
of an unfavorable outcome is probable in some of the suits and, accordingly, accrued liabilities include 
the aggregate amount of deductibles under apphcable insurance policies. However, a substantial 
number of the lawsuits are in the discovery stages and counsel to the Port cannot express an opinion as 
to the possible outcome of such litigation. The ultimate resolution of such matters is not expected to 
have a material effect on the Port's financial position or results of operations. 

Contingencies 

Certain grants that the Port receives are subject to audit and final acceptance by the granting 
agency based upon their review of costs incurred. 

Under a management advisory contract signed in December 1973, the Port transferred its railroad 
operations to Port Railroad, Inc. for a period of twenty years. The contract is cancellable by Port 
Railroad, Inc. with nine months' written notice. 

Concentration of credit risk: The Port leases facilities (commercial and maritime) to businesses, 
substantially all of which are located in San Francisco. The trade accounts receivable relate to such 
activities. 

NOTE 1 1 - LITIGATION SETTLEMENT: 

In December 1985, the Port filed a declaratory relief action requesting the court to determine that 
the Port had legally terminated an agreement with a property developer. The developer cross- 
complained against the Port, seeking damages in excess of $9 million. In 1991, the Port paid $3 million 
to the developer in settlement of the litigation. The Port also incurred $1 1 5,000 of legal expenses in 
1991 related to the litigation and settlement. 

NOTE 1 2 - EARTHQUAKE DAMAGES: 

The Port suffered damage from the Loma Prieta earthquake which occurred October 17, 1989. 
All damaged property and infrastructure have been identified. The Port expects to repair all 
earthquake-related damages, which is currently estimated to total $6,517,000. As of June 30, 1992, 
$3,090,000 has been expended. These estimates do not include costs relating to seismic upgrades, 
retrofitting or other improvements. 

The Port has been granted $6,517,000 in Federal and state emergency assistance of which 
$2,868,000 has been received to date. The Port has recorded a receivable in the amount of $3,649,000 
which represents the amount of approved Federal and state assistance which the Port intends to utili/.c 
to repair and replace its property and infrastructure, less amounts received to date. 

^ NOTE 13 - SUBSEQUENT EVENT: 

In September 1992, the Cahfornia State Legislature amended the Public Resources Code 
(The Code), enabling the City to transfer discretionary reserves from die Port to the C]it\'. 

The Code defines discretionary reserves as the greater of (a) 25% of the Port's total current assets 
less total current liabilities ( "working capital ") reported in the most recent audited financial statements 
made public prior to June 30, 1992 and each year thereafter, or (b) $4 million. After the Port certifies 
the amount of discretionary reserves, the City has the option of transferring any or all of such rcser\ es 
on or before March 31, 1993 and each March 3 1 thereafter until the provision is repealed. Tlic provi- 
sion will remain in effect only until June 30, 1994 and as ofjanuary 1, 1995 is repealed. 

The amount available for transfer before March 31, 1993 would be the 25% of working cajiitai 
as of June 30, 1991, or approximately $4.3 million. The 25% of working cajiital is approximately $4.'' 
million as of June 30, 1992. This amount would be available for transfer on or before March 31, I9*>4. 



21 





Cover: Gretchen Grover 

Photography: Gretchen Grover, Mark Snyder, 

Marceline Therrien 
Design: None! Chin Graphics 



QQrt DEPT. 
OCT 41994 

SAN FRANCISCO 
PUBLIC LIBRARY 



'n:::port commission 

^X:iTY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 




INANCIAL STATEMENTS 
AND 

INDEPENDENT AUDITORS ' REPORT 



JUNE 30, 1992 AND 1991 



Hood 

^ and 

Strong 



certified ^public 
accountants 



TOMEI & Chu 

Certihed Public Accountants 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 



FINANCIAL STATEMENTS 
AND 

INDEPENDENT AUDITORS' REPORT 



JUNE 30, 1992 AND 1991 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 

FINANCIAL STATEMENTS 
AND 

INDEPENDENT AUDITORS' REPORT 
JUNE 30, 1992 AND 1991 

TABLE OF CONTENTS 



PAGE 

INDEPENDENT AUDITORS' REPORT 1 

BALANCE SHEET 2 

STATEMENT OF OPERATIONS 3 

STATEMENT OF EQUITY 4 

STATEMENT OF CASH FLOWS 5 

NOTES TO FINANCIAL STATEMENTS 6-16 



Hood 

and 

Strong 

certified public 
accountants 

101 California Street, Suite 1500 
San Francisco, CA 94111 
Telephone (415) 781-0793 



TOMEI & CHU 

Certified Pubuc Account akis 



44 Montgomery Stmet. Sutte 2410 
San Francisco, California 94104 
Telephone (415) 398-4769 
Facsimile (415) 3966664 



INDEPENDENT AUDITORS' REPORT 



THE HONORABLE EDWARD HARRINGTON, CONTROLLER, 
CITY AND COUNTY OF SAN FRANCISCO 



We have audited the accompanying balance sheet of the 
PORT COMMISSION, CITY AND COUNTY OF SAN FRANCISCO, PORT OF 
SAN FRANCISCO ("Port") as of June 30, 1992 and 1991, and the related 
statements of operations, equity, and cash flows for the years then ended. 
These financial statements are the responsibility of the Port's management. 
Our responsibility is to express an opinion on these financial statements 
based on our audits. 

We conducted our audits in accordance with generally accepted 
auditing standards. Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement . An audit includes examining, on a test 
basis, evidence supporting the amounts and disclosures in the financial 
statements. An audit also includes assessing the accounting principles used 
and significant estimates made by management, as well as evaluating the 
overall financial statement presentation. We believe that our audits provide 
a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of the Port as of 
June 30, 1992 and 1991, and the results of its operations and its cash flows 
for the years then ended, in conformity with generally accepted accounting 
principles . 




October 1, 1992 



1 



t 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 

BALANCE SHEET 
JUNE 30, 1992 AND 1991 
(In thousands) 



1992 1991 

ASSETS 



CURRENT ASSETS: 



Cash and investments, held in City Treasury - 



Port operating fund 


$ 19,966 


S 20,343 


Receivables 


8, 889 


7, 455 


Materials and supplies 


1, 453 


1, 375 


Prepaid insurance and other assets 


918 


922 


Total Current Assets 


31 .??6 


30.095 


RESTRICTED ASSETS: 






Cash and short-term investments: 






Capital outlay 


12,000 


12, 972 


Bond interest and redemption 


10,241 


10, 486 


Lessee deposits held in trust 


1 . 7R4 


1 .800 


Total Restricted Assets 


24.025 


25.258 


PROPERTY, PLANT, AND EQUIPMENT - Net 


187.123 


189.543 


LONG-TERM RECEIVABLE 


60S 


55? 


TOTAL ASSETS 


S242, 979 


5245,448 


LIABILITIES AND EQUITY 






^nTJTJTTMT T TADTT T T T TT C ■ 

CUKKtjIMl ijl ArilLl i Ihb : 






Accounts payable and accrued liabilities 


S 7,819 


S 8,997 


Current maturities of long-term debt 


3, 575 


3, 760 


Accrued bond interest payable 


153 


175 


Total Current Liabilities 


1 1 . 54 7 


12. 932 


PAYABLE FROM RESTRICTED ASSETS: 






Accrued bond interest payable 


2, 385 


2,448 


Lessee deposits 


1,784 


1, 80C 


Deferred grants 


7 b 




Total payable from restricted assets 




. ? 92 


DEFERRED REVENUE 


321 


419 


LONG-TERM DEBT - Net of current maturities 


67.387 


71 . 1 3fi 


Total Liabilities 


83.499 


88.781 


EQUITY: 






Contributed capital 


20, 132 


19,294 


Revaluation of property 


56, 063 


56,063 


Retained earnings 


83.285 


81.310 


Total Equity 


159.480 


1 56.667 


TOTAL LIABILITIES AND EQUITY 


S242, 979 


$245,448 


The accompanying notes are an integral part 


of this Statement. 





2 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
STATEMENT OF OPERATIONS 
YEARS ENDED JUNE 30, 1992 AND 1991 
(In thousands) 



1992 



1991 



OPERATING REVENUES: 

Property rentals - commercial 
Property rentals - maritime 
Wharfage, dockage, and demurrage 
Commercial power 
Other 



$18, 549 
6,288 
7, 721 
989 

m 



$18,880 
6, 018 
6, 983 
992 
2il 



Total Operating Revenues 



33.982 



33 , 124 



OPERATING EXPENSES: 
Operations 
Maintenance 
Depreciation 
Commercial power 
Fire boat operations 



12,704 
10,445 

4, 644 
791 

1.187 



11, 574 
12, 574 

5,114 
794 

1.295 



Total Operating Expenses 
Operating Income 



29.771 
4.211 



31. 351 
1.773 



OTHER INCOME (EXPENSE) : 

Interest income 2,147 2,329 

Interest expense ( 4,383) { 4,479) 

Earthquake damages and expenses (1,757) ( 535) 
Federal and state earthquake assistance 1,757 535 

Litigation settlement ( 3,115) 

Other Z 

Total Other Income (Expense) ( 2,236 ) ( 5. 263 ) 



NET INCOME (LOSS) $ 1, 975 ( $ 3,490 ) 



The accompanying notes are an integral part of this statement. 



3 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
STATEMENT OF EQUITY 
YEARS ENDED JUNE 30, 1992 AND 1991 
(In thousands) 



Contributed Revaluation Retained Total 

Capital of Property Earnings Equity 



BALANCES AS OF JUNE 30, 1990 $18,156 $56,063 $84,800 $159,019 



Capital grants 



1,13! 



1,138 



Net loss for the year 
ended June 30, 1991 



( 3.4 90 ) ( 3.490 ) 



BALANCES AS OF JUNE 30, 1991 19,294 



56, 063 



81,310 



156, 667 



Capital grants 



838 



838 



Net income for the year 
ended June 30, 1992 



1. 975 



1. 975 



BALANCES AS OF JUNE 30, 1992 $20, 132 $ 56, 063 $83, 285 $ 159, 480 



The accompanying notes are an integral part of this statement. 



4 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
STATEMENT OF CASH FLOWS 
YEARS ENDED JUNE 30, 1992 AND 1991 
(In thousands) 



1992 



1991 



CASH FLOWS FROM OPERATING ACTIVITIES: 
Operating income 

Adjustments to reconcile operating income to net cash 
provided by operating activities: 
Depreciation 

Provision for uncollectible accounts 
Net deferral (recognition) of deferred revenue 
Changes in assets and liabilities; 
(Increase) decrease in: 
Receivables 

Materials and supplies 
Prepaid insurance and other assets 
Increase (decrease) in: 

Accounts payable and accrued liabilities 

Net cash provided by operating activities 



$ 4,211 



4, 644 
83 

( 98) 



( 990) 
( 78) 

4 

( 2.473 ) 
5. 303 



$ 1,773 



5, 114 
203 
84 



( 558) 
43 

{ 35) 

^- • 31C 
7. 934 



CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: 
Litigation settlement 
Proceeds from disaster assistance 
Earthqua)ce damages and expenses 

Net cash provided by (used for) noncapital financing 
activities 



782 



.2211 



{ 3,115) 
1, 009 

( 1.229 1 

( 3. 335) 



CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: 

Acquisition and construction of property, plant and 

equipment 
Capital grants received 
Principal payments on long-term debt 
Interest payments on long-term debt 
Interest income capitalized 
Proceeds on sale of property and equipment 

Net cash used for capital financing activities 



( 1,690) 
1,183 
( 4,035) 
( 5,884) 
981 



( 9. 445 ) 



( 3,313) 
2, 548 
( 3,325) 
( 6, 089) 
1,233 
Z 

( 8. 944 ) 



CASH FLOWS FROM INVESTING ACTIVITIES: 

Net decrease in restricted cash and investments 
Interest income received 

Net cash provided by investing activities 



1,217 

^-445 



894 

?-393 

■l.?B7 



NET DECREASE IN CASH AND CASH EQUIVALENTS 



377) 



( 1,058) 



CASH AND CASH EQUIVALENTS; 
Beginning of year 

End of year 



$ 19, 966 



T - 4 
$ 20, 343 



The accompanying notes are an integral part of this statement. 



5 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: 
Organization: 

The Port of San Francisco ("Port") is an enterprise fund of the City 
and County of San Francisco ("City") . A five-member Port Commission is 
responsible for its operation, development, and maintenance. Commission 
members are appointed by the City's Mayor for terms of four years. The 
Port is an integral part of the City, and the accompanying financial 
statements are included as a component of the City's Comprehensive Annual 
Financial Report . 

Prior to February 1969, the Port was owned by the State of California 
("State") and administered by the San Francisco Port Authority, a State 
agency. In February 1969, the Port was transferred in trust to the City 
under the terms and conditions specified in the State statutes of 1968, 
Chapter 1333 ("Burton Act"), as amended, and ratified by the City's 
voters in November 1968. 

Under the terms of the Burton Act, the State Legislature reserved the 
right to amend, modify, or revoke, in whole or in part, the transfer of 
lands in trust, provided that the State would then assume all lawful 
obligations related to such lands. 

The Port's revenue is derived from both commercial rental and 
maritime operations. All of the Port's tenants, and substantially all of 
its other customers, are located in the City. 

Materials and Supplies: 

Materials and supplies are used for construction and maintenance of 
Port facilities and are stated at cost, on a first-in, first-out basis. 

Property, Plant and Equipment : 

Land transferred to the City in February 1969 is stated at an amount 
which includes an increase over historical cost of $56,063,000. This 
amount was recorded by the State in prior years to reflect appraised 
values in 1929. The Port's management estimates that the fair mar)cet 
value of such land significantly exceeded recorded amounts at the time of 
the transfer. 

Other property, plant and equipment is carried at cost or at fair 
market value at the date received in the case of property received by 
donation or by termination of a lease. 

Depreciation is computed by use of the straight-line method over the 
estimated useful lives of the assets. Land improvements (principally 
pavement and railroad tracks) with a cost of approximately S18 million 
are not depreciated because, in the opinion of management, the assets 
will be maintained to provide indefinite useful lives. Maintenance and 
repairs are expensed as incurred. 



6 



1 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) : 
Property, Plant and Equipment (Continued) : 

Interest paid on bond funds used for construction purposes, less 
interest earned on the temporary investment of the proceeds of such tax- 
exempt borrowings, is capitalized from the date of borrowing through the 
construction period. 



Statement of Cash Flows: 

For purposes of the statement of cash flows, all unrestricted cash 
and highly liquid investments with maturities of three months or less, 
when purchased, are considered to be cash equivalents. 



NOTE 2 - CASH AND INVESTMENTS: 

The Port maintains its cash and investments and a portion of its 
restricted asset cash and investments as part of the City's pool of cash and 
investments. The City's pool is invested pursuant to investment policy 
guidelines established by the City Treasurer. The objectives of the policy 
are, in order of priority, preservation of capital, liquidity, and yield. The 
policy addresses soundness of financial institutions in which the City will 
deposit funds, types of investment instruments as permitted by the California 
Government Code, and the percentage of the portfolio which may be invested in 
certain instruments with longer terms to maturity. In addition, a City 
ordinance prohibits deposits and investments with financial institutions 
having specified relations with either the government of South Africa or 
certain private entities doing business with or in South Africa. The 
Comprehensive Annual Financial Report of the City categorizes the level of 
risk associated with the City's pooled cash and investments. 

At June 30, 1992 and 1991, cash and investments held by trustees 
include $10,241,000 and $10,486,000, respectively, invested in a U.S. Agency 
government fund. The cost approximates market value and the investments may 
be withdrawn on demand. 

At June 30, 1992 and 1991, lessee deposits held in trust include 
$970,000 and $858,000, respectively, invested in short-term, renewable 
certificates of deposit. The cost approximates market value and the deposits 
are insured and held by the Port in its own name. 



7 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 3 - RECEIVABLES: 



At June 30, 1992 and 1991, receivables consisted of: 



1992 1991 
(In thousands) 

Trade accounts receivable $ 3,902 $ 2,988 

Less allowance for doubtful accounts 410 327 

3,492 2,661 

City and County of San Francisco - grants 815 

City and County of San Francisco - general 114 32 

Accrued interest receivable 690 824 

Accrued revenue and other receivables 155 161 

Grants receivable 789 288 
Federal and state disaster assistance 

receivable 3, 649 2, 674 

$ 8,889 $ 7,455 



As discussed in Note 12, the federal and state disaster assistance 
receivable represents the excess of approved federal and state assistance 
relating to the Loma Prieta earthquake over amounts received. 



NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT: 



Of; 



At June 30, 1992 and 1991, property, plant and equipment consisted 

Estimated 

1992 1991 Useful Life 

(In thousands) (Years) 

Land and land improvements $113,136 $113,136 
Buildings, structures and 

related improvements 171,352 171,341 5-59 

Equipment 4.149 3. 921 5-25 

Total 288,637 288,398 

Less accumulated depreciation ( 106, 325 ) ( 101,847 ) 

Net 182,312 186,551 

Construction work in progress 4.811 2 . 992 

Total $ 187, 123 $ 189, 543 



8 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT (Continued) : 

Total interest cost was $5,898,000 and $6,129,000 for fiscal years 
1992 and 1991, of which $1,515,000 and $1,650,000 was capitalized, 
respectively. Total interest earned was $3,128,000 and $3,562,000 for fiscal 
years 1992 and 1991, of which $981,000 and $1,233,000 was capitalized, 
respectively. 

The cost of fully depreciated assets still in use was approximately 
$65,700,000 and $58,900,000 at June 30, 1992 and 1991, respectively. 



NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: 

At June 30, 1992 and 1991, accounts payable and accrued liabilities 
consisted of: 

1992 1991 
(In thousands) 

Accounts payable $1,052 $1,456 

Due to the City and County of San Francisco 426 1,744 

Accrued liabilities 846 816 

Accrued payroll and related costs 2,068 2,849 

Accrued earthquake related expenses 3,427 2,132 

$7,819 $8, 997 



NOTE 6 - LONG-TERM DEBT: 

At June 30, 1992 and 1991, long-term debt consisted of: 

Fiscal 

Interest Year Last Balance 

Rate Series 
(%) Matures 1992 1991 

(In thousands) 

General Obligati on Bonds : 

State of California: 
Fifth Seawall 1958, 

Series F, G, and H 2.50 - 4.85 1999 $ 5,055 $ 6,110 

City and County of 

San Francisco - Harbor 
Improvement 1971: 

Series A 4.5 - 5.25 2003 8,800 9,600 

Series B 6.3 2005 5.200 5. 60 

Total General 

Obligation Bonds 19. 055 21 . 310 



9 



I 



PORT COMMISSION 
. CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 6 - LONG-TERM DEBT (Continued) : 



Revenue Bonds: 

Series A 1969 
Series B 1971 
Series C 1984 

Total Revenue Bonds 

Total Long Term-Debt 

Less : 

Current maturities 
Unamortized discount - 
Revenue Bond Series C 



Interest 
Rate 
(%) 



7-2 
5.5 
9.5 -11.5 



Fiscal 
Year Last 
Series 
Matures 



1999 
2001 
2009 



1992 1991 
(In thousands) 



S 6,700 
5, 000 
41.350 

53.050 

72, 105 

3, 575 
:,143 



$ 7,300 
5, 625 
41.905 

54. 830 

76, 140 

3,760 
1.242 



Net Long-Term Debt 



$ 67, 387 



$ 71,138 



The bonds mature as follows: 

City and County 

State of cf Revenue 

California San Francisco Bonds Total 

Year Ending June 30: 
(In thousands) 

1993 $ 1,055 $ 1,200 $ 1,320 S 3,575 

1994 1,055 1,200 1,755 4,010 

1995 1,045 1,200 1,925 4,170 

1996 670 1,200 2,120 3,990 

1997 660 1,200 2,455 4,315 
Thereafter 570 S, COO 43.475 52. 045 

$ 5, 055 $14, 000 $53, 050 $72, 105 



The revenue bonds are collateralized by the net revenues of the Port, 
as defined by the bond resolution, are subordinated to the general obligation 
bonds of the State, and are on a parity with any future revenue bonds. The 
general obligation bonds issued by the City are subordinated to the revenue 
bonds and any future revenue bonds . 



10 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 6 - LONG-TERM DEBT (Continued) : 

The revenue bonds require that net revenues of the Port, as defined, 
be at least 1.3 times the debt service requirements of such bonds for the 
following twelve months. Certain bond resolutions require that the Port 
maintain funds for the purpose of accumulating assets which are restricted to 
interest and principal payments. Such resolutions prescribe the amounts to be 
accumulated and the types of securities in which the restricted assets may be 
invested, as discussed in Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds 
may be used for reconstruction of the property or for construction of related 
property. If the proceeds are not used for those purposes, they must be 
applied to the redemption of bonds as provided in Article III, Port Commission 
Resolution Number 5231. At both June 30, 1992 and 1991, restricted capital 
outlay funds included unexpended fire insurance proceeds of $1,451,000. 



NOTE 7 - OPERATING REVENUES - PROPERTY RENTALS: 

The Port leases property and facilities to others. These leases 

provide for 30-day cancellation or for retention of ownership by the Port at 

the termination of the agreement. Accordingly, all leases are accounted for 
as operating leases. 

Certain of the Port's property rental agreements specify rental 
payments based on a percentage of tenant sales, subject to a minimum amount. 
Property rental revenues were comprised as follows: 



1992 1991 
(In thousands) 

Minimum rentals 
Percentage rentals 

$24, 837 $24, 898 



$21,453 
3,384 



$20, 898 
4.000 



Minimum future rental income under noncancellable operating leases 
having terms in excess of one year are as follows: 

Year ending June 30: 
(In thousands) 

1993 $ 9,654 

1994 9,337 

1995 8,951 

1996 8,544 

1997 8,202 
Thereafter 200.443 

Total $ 245, 131 



11 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 7 - OPERATING REVENUES - PROPERTY RENTALS (Continued) : 

The approximate cost of property subject to operating leases and 
property held for lease at June 30, 1992 consisted of: 

(In Thousands) 

Land and land improvements $ 47,000 

Buildings, structures, and related improvements 

(at cost, less accumulated depreciation of $98,000) 59,000 

Total $ 106, 000 



NOTE 8 - EMPLOYEE BENEFIT PLANS: 
Retirement Plans : 

a. City and County of San Francisco: 

The City has a defined benefit retirement plan (The Plan) which is 
administered by the San Francisco City and County Employees' 
Retirement System (Retirement System) . This note contains condensed 
information on the Plan. More specific information, including ten- 
year historical trend data which provides information about progress 
made in accumulating sufficient assets to pay benefits when due, can 
be found in the financial statements and supplemental schedules of 
the Retirement System. The Plan covers the majority of all full-time 
employees of the Port along with other employees of the City. The 
Plan provides retirement, death and disability benefits. Benefits 
are based on specified percentages of average final compensation and 
length of service, with annual cost-of-living adjustments after 
retirement . 

The Plan is financed primarily by (a) contributions from the City, 
which includes contributions from the Port, (b) employee 
contributions, and (c) income from investments. Pension expenditures 
of the City, including that of the Port, are based on rates set by 
the Retirement Board of the Retirement System. Annual contributions 
to the Plan are equal to amounts accrued for pension expense and 
include amortization of past service costs through June 30, 2000. 

In November 1991 the voters approved proposition A, "The Early 
Retirement Program. " Under the program, three years of age and three 
years of service were added when calculating the service retirement 
benefits for all miscellaneous members who elected to retire during 
the period February 1, 1992 through March 30, 1992. Approximately 
1,800 City and County employees retired under the program. 



12 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 8 - EMPLOYEE BENEFIT PLANS (Continued) : 
Retirement Plans (Continued) : 

a. City and County of San Francisco (Continued) : 

The latest actuarial valuation of the Plan was completed in 
February 1992 by the actuarial firm of Towers Perrin and was based 
upon employee data and asset information as of June 30, 1991. The 
significant economic assumptions used in the valuation were an annual 
return on investments of 8%, an annual increase in wages attributable 
to inflation of 6%, annual consumer price index increases of 5%, and 
an expected future growth in the number of employees of 0%. 

The following information is presented as a result of this valua- 
tion as of June 30, 1991 and includes substantially all City fund 
groups : 

(In Millions) 

Pension benefit obligation $5,179 

Net assets available for benefits at cost 

(market value $4, 630) 4. 393 

Unfunded pension benefit obligation $ 786 

The impact of the Early Retirement Program will be reflected in 
the pension benefit obligation as of June 30, 1992, which will be 
disclosed in the June 30, 1993 financial statements. 

The City (including the Port) met the actuarially determined con- 
tribution requirements for the years ended June 30, 1992 and 1991. 
Pension costs relating to the Port were $1,195,000 and $1,381,000 for 
1992 and 1991, respectively. 

b. State of California: 

The Port also contributes to the California Public Employees' 
Retirement System (PERS) , an agent multiple-employer public employee 
retirement system that acts as a common investment and administrative 
agent for participating public entities within the state of 
California. Certain employees who commenced their employment at the 
Port prior to February 1969 are eligible to participate in PERS. 

Participating employees are required to contribute 7 percent of 
their salary to PERS. The Port is required to contribute the remain- 
ing amounts necessary to fund the benefits for its members, using the 
actuarial basis recommended by PERS actuaries and actuarial consul- 
tants and adopted by the Board of Administration. 

The Port's contributions to PERS totalled approximately $10,000 
and $13,000 for 1992 and 1991, respectively. The City's Office of 
the Controller Comprehensive Annual Financial Report contain disclo- 
sures for all covered City employees. Amounts for the Port are not 
separable from the City totals. 



13 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 8 - EMPLOYEE BENEFIT PLANS (Continued) : 

Deferred Compensat ion Plan 

The City offers its employees a deferred compensation plan created in 
accordance with Internal Revenue Code Section 457. The Plan, available 
to all Port employees, permits them to defer a portion of their salary 
until future years. The deferred compensation is not available to 
employees until termination, retirement, death or unforeseeable 
emergency . 

All amounts of compensation deferred under this plan, all property 
and rights purchased with those amounts, and income earned (until paid or 
made available to the employee or other beneficiary) are solely the 
property and rights of the City and County, subject only to the claims of 
the City and County's general creditors. Participants' rights under the 
deferred compensation plan are equal to those of general creditors of the 
City and County in an amount equal to the fair market value of the 
deferred account for each participant . 

The amount of assets and related participant obligations for Port 
employees is not separable from the total City plan. The total plan 
assets and obligations are accounted for in an agency fund of the City 
and are included in the City's Comprehensive Annual Financial Report. 
The amounts deferred by Port employees totalled $199,000 and $191,000 for 
1992 and 1991, respectively. 

Health Care Benefits - Retired Employees : 

Health care benefits of Port employees, retired employees and 
surviving spouses are financed by beneficiaries and by the City and 
County through the City and County of San Francisco Health Service 
System, a nonexpendable trust fund. The Port's contribution, which 
amounted to approximately $448,000 and $381,000 in fiscal years 1992 and 
1991, respectively, is determined by Charter provision based on similar 
contributions made by the ten most populous counties in California. The 
cost of providing benefits for the retirees is not separable from the 
cost of providing benefits for the active employees. The Port's 
liability for both current employee and post retirement health care 
benefits is limited to its annual contribution. 



NOTE 9 - RELATED PARTY TRANSACTIONS: 

The Port receives services from, and provides services to, various 
City departments. The cost of services received, included as operating ex- 
penses in the financial statements, was approximately $4,048,000 in 1992 and 
$3,622,000 in 1991. Services provided, included in operating revenue, 
amounted to approximately $570,000 and $529,000 in 1992 and 1991, respec- 
tively. Receivables and payables relating to such transactions are disclosed 
in Notes 3 and 5, respectively. 



14 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 10 - COMMITMENTS, LITIGATION AND CONTINGENCIES: 
Commitments: 

The Port is presently planning various development projects which in- 
volve a commitment to expend significant funds. The Port had firm purchase 
commitments at June 30, 1992 for approximately $7,952,000 for capital projects 
and $1,529,000 for general operations. 

Litigation : 

The Port is a defendant in various lawsuits; most deal with personal 
injury or property damage resulting from accident or fire and are covered by 
insurance. In the opinion of counsel the likelihood of an unfavorable outcome 
is probable in some of the suits and, accordingly, accrued liabilities include 
the aggregate amount of deductibles under applicable insurance policies. 
However, a substantial number of the lawsuits are in the discovery stages and 
counsel to the Port cannot express an opinion as to the possible outcome of 
such litigation. The ultimate resolution of such matters is not expected to 
have a material effect on the Port's financial position or results of opera- 
tions . 

Contingencies : 

Certain grants that the Port receives are subject to audit and final 
acceptance by the granting agency based upon their review of costs incurred. 

Under a management advisory contract signed in December 1973, the 
Port transferred its railroad operations to Port Railroad, Inc. for a period 
of twenty years. The contract is cancellable by Port Railroad, Inc. with nine 
months' written notice. 

Concentration of credit risk: The Port leases facilities (commercial 
and maritime) to businesses, substantially all of which are located in San 
Francisco. The trade accounts receivable relate to such activities. 



NOTE 11 - LITIGATION SETTLEMENT: 

In December 1985, the Port filed a declaratory relief action 
requesting the court to determine that the Port had legally terminated an 
agreement with a property developer. The developer cross-complained against 
the Port, seeking damages in excess of $9 million. In 1991, the Port paid $3 
million to the developer in settlement of the litigation. The Port also 
incurred $115,000 of legal expenses in 1991 related to the litigation and 
settlement . 



15 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 12 - EARTHQUAKE DAMAGES: 

The Port suffered damage from the Loma Prieta earthquake which 
occurred October 17, 1989. All damaged property and infrastructure have been 
identified. The Port expects to repair all earthquake-related damages, which 
is currently estimated to total $6,517,000. As of June 30, 1992, $3,090,000 
has been expended. These estimates do not include costs relating to seismic 
upgrades, retrofitting or other improvements. 

The Port has been granted $6,517,000 in Federal and state emergency 
assistance of which $2,868,000 has been received to date. The Port has 
recorded a receivable in the amount of $3,649,000 which represents the amount 
of approved Federal and state assistance which the Port intends to utilize to 
repair and replace its property and infrastructure, less amounts received to 
date. 



NOTE 13- SUBSEQUENT EVENT: 

In September 1992, the California State Legislature amended the 
Public Resources Code (The Code), enabling the City to transfer discretionary 
reserves from the Port to the City. 

The Code defines discretionary reserves as the greater of (a) 25% of 
the Port's total current assets less total current liabilities ("working 
capital") reported in the most recent audited financial statements made public 
prior to June 30, 1992 and each year thereafter, or (b) $4 million. After the 
Port certifies the amount of discretionary reserves, the City has the option 
of transferring any or all of such reserves on or before March 31, 1993 and 
each March 31 thereafter until the provision is repealed. The provision will 
remain in effect only until June 30, 1994 and as of January 1, 1995 is 
repealed. 

The amount available for transfer before March 31, 1993 would be the 
25% of working capital as of June 30, 1991, or approximately $4.3 million. 
The 25% of working capital is approximately $4.9 million as of June 30, 1992. 
This amount would be available for transfer on or before March 31, 1994. 



16 



II 

I 



I 



_TABLE OF CONTENTS 



PORT OF 

SAN FRANCISCO 

Port Commissioners 

Preston Cook, President 

Anne W. Halsted, Vice President 

Ming Chang O'Brien 

James R. Hernnan 

Francis J. O'Neill 

Executive Director 

Dennis P. Bouey 

Japan ' 

Japan Representative, Port of San Francisco 

Transmarine Ltd. 

3rd Floor Fukuhara Building 

No. 4-1, Nihonbashi, Odenmacho 1 

Chuoku, Tokyo 103, Japan 

Telephone: 03-808-1804 
Fax:03-808-1800 | 
Telex: USA 7608202 BRCTYO UC j 

Taiwan 

Grand World Shipping Agencies, Ltd. ! 
Asia Enterprise Center, 14th Floor ' 
600 Minchuan East Road 
Taipei, Taiwan, Republic of China | 

Telephone: (02) 71 6-9555 ' 

Fax: 88602-716-9558 

Telex: 13072 GRANAGEN 
U.S. iVIidwest i 
Trade Reps Ltd. ; 
P.O. Box 1865 i 
Arlington, IL 60006 

Telephone: (708) 590-0422 

Fax: (708) 255-0809 

WHARFSIDE is published quarterly by the 
Port of San Francisco's Legislative Affairs 
and Communications Office, which is solely 
responsible for its content. Comments, 
address corrections, or requests to be added; 
to the mailing list should be addressed to ■ 
the Editor: 

I 

WHARFSIDE 

The Port of San Francisco 
Ferry Building, Suite 3100 
San Francisco, CA 94111 

I 

(415)274-0400 i 
Fax (41 5) 274-0528 ' 
Telex 275940 PSFUR ; 



/ Port Commission President's Letter 

2 New Port Director Speaks Out 

An Interview with Dennis Bouey 

6 Port Financial Situation: An Analysis 

7 Fiscal Year Income Statement 
S Planning the Future 
S Waterfront Plan Timeline 
10 Pictorial Year in Review 

Project Updates 

12 Fisherman's Wharf Projects 

13 Waterfront Transportation Projects 

14 Cargo Services' Projects 
14 Ferry Building Projects 

Along the Waterfront 

16 Scoma's Sets New Standards in Fish Preparation 

1 7 Starporter Crane Grows 

18 Blue Star Line Signs New Agreement 

18 NYK's Margarita Express Adds New Service 

1 9 New Leasing Policies Take Affect 

19 Cook Elected Commission President 

20 Friends of the Port Set Sail for 1994 

21 Events at the Port 

21 Coit Tower Plaque Restored 

21 MVArkona Makes Maiden Call 



Cover: New leg on Starporter crane, Pier 94 
Back: Ferry Building 
Photograpliy: Gretchen Grower and Mark Snyder 
Design: Nanci Chin Graphics 
Printing: Somerset Printing 






GENERAL MANAGER'S REPORT 



San Francisco 
Port Commission 



/fl had to pick one word to summarize the past year at 
the Port, it would have to be "change." Life is nothing 
more than a series of changes, but this year the Port 
seemed to be more affected by it, with many new things replacing the old: 

New faces. Executive Director Michael Huerta left in May to be the 
nation's intermodal czar as the Associate Secretary of Transportation. 
Wally Abernathy, former Port of Oakland manager, ably filled in for him 
during the lengthy selection process. And, just before year's end, Dennis P. 
Bouey, former Deputy Director of San Francisco International Airport, 
started work as our new Executive Director. 

New looks for familiar places. The Ferry Building showed a new face, 
as the scaffolding that has been hiding the facade since the Loma Prieta 
earthquake finally came down as repairs were completed. The Embarca- 
dero roadway from Bay to King went "under construction" as elements of 
the City's Waterfront Transportation Projects progressed. Pier 80's seven 
million dollar improvement project was completed, turning the NCT into 
a brand new, state-of-the art terminal and improving throughput. 

New ideas. By putting 30 of the leading urban planning and architectur- 
al experts in a room together, we gained some valuable new ideas for reno- 
vating the Ferry Building and for building the waterfront of the future. 
And, with the publication of the Options for Change Report in October, we 
are closing in on the draft of the Waterfront Plan. 

New ways for doing things. We've streamlined the leasing policy and 
established some standard procedures which should make it easier to rent 
commercial facilities. Plus we've begun to prioritize projects and look at 
long-term goal setting and budget planning. 



The Port's customers remain our 
number one priority. The Port 
Commission is committed to build- 
ing a strong Port which rePects the 
diversity of the City. We believe that 
we have the "building blocks" in 
place that will make the waterfront 
renaissance possible. 




Preston Cook 
President 



standing: James R. Herman; Francis J. O'Neill 

Seated: Anne Halsted, Vice President; 

Preston Cook, President; and Ming Chang-O'Brien 



NEW PORT DIRECTOR 
SPEAKS OUT 

An Interview with Dennis Bouey 



Dennis P. Bouey was named 
to the position of Executive 
Director in November 1993 
and began work in December. 

Prior to coming to the Port 
he was the Deputy Director, 
San Francisco International 
Airport. He has also served as 
the Executive Deputy to the 
Chief Administrative Officer 
of San Francisco and as 
Business Manager and 
Financial Secretary of the 
International Federation of 




Professional and Technical 
Engineers, Local 21, AFL-CIO. 
He also did an extended tour 
in Vietnam as a member of 
the U.S. Army Special Forces. 

A native San Franciscan, he is 
a graduate of Saint Ignatius 
High School and holds a B.A. 
in Economics from the 
University of San Francisco. 

He spoke to Wharfside 
Magazine about his goals 
and vision for the Port. 



You've had a couple of weeks now to 
get your feet wet here at the Port, 
what's your first impression? 

That the Port is at a critical time. Our 
financial situation is precarious, yet 
the timing may be right for the Port 
to take advantage of its immense 
potential. Because of our financial 
condition, we have to move quickly to 
ensure the survivability of the Port. 
At the same time, the Waterfront 
Plan Advisory Committee's- work will 
soon be coming to a conclusion, and, 
armed with their report, we can edu- 
cate our tenants and the citizens of 
San Francisco to the needs and poten- 
tial of the Port. The support of the 
city's population is necessary to 
launch the Port successfully into the 
twenty-first century. 



From what you have seen, 
what are the Port's strengths? 

That we have a wonderful promenade 
that is unparalleled anywhere in the 
world, that we have a rich history, 
and that the citizens of San Francisco 
care and will require not only contin- 
ued access, but that any development 
of this truly beautiful waterfront be 
first rate. 

On the other side of the question, 
what are the Port's weaknesses? 

That, as an organization, the Port 
lacks the necessary management sup- 
port systems to carry out its mission. 
The department's organization lacks 
clarity. We need to streamline and 
redefine some of our functions so we 



can better serve ovir customers. It is 
important that we carry out our busi- 
ness in a more professional way so 
people will trust us with the develop- 
ment of the waterfront. 

Additionally, there are three major 
problems that the Port must immedi- 
ately overcome: 

1) lack of money 

2) laws that unnecessarily 
restrict the Port 

3) strong public opinion... we 
need to inform users and citi- 
zens better about the current 
condition of the Port, what 
our vision is, and why we 
should be trusted to enhance 
its beauty and viability. 



J V 



You are a San Francisco native. 
Wliat influence do you thinic that 
has on your perspective about 
the Port? 

I think what it gives me is a deeper 
appreciation of what the waterfront 
means to those who Hve here. And 
that I want to ensiare that those who 
follow will appreciate the waterfront 
in the same way I do. 

What's your vision for the Port? 

My overall vision is to integrate the 
Port into the fabric of the City. As it 
is now, you come down the great 
boulevard of Market Street and find 
that it ends about 400 feet short of 
the Ferry Building. Here we have 
this terrific building that serves as a 
focal point for the City, and yet, the 
City's main artery stops short of the 
waterfront. 

So in my vision, I believe we extend 
that boulevard into a grand, beauti- 
fully-designed piazza in front of the 
Ferry Building where people can 
congregate, drink a cup of coffee, and 
watch artists at work. Then we 
start connecting the rest of the 
waterfront north of the Ferry 
Building to Fisherman's Wharf... 
and we need to look south and do the 
same thing. 



'My overall vision 
is to integrate 




Our goal must be to transform the 
waterfront into something that is 
vital and alive... a place that citizens 
and visitors will want to visit. 

Concurrently, we need to work on 
keeping the maritime that we have, 
and to build on it. We want to ensure 
that shipping lines like Evergreen 
continue to do business with San 
Francisco. Part of this effort requires 
obtaining capital investment and, 
given the Port's ctirrent financial sit- 
uation, we need to find other streams 
of revenue to fund those improve- 
ments. I think that those revenues 



the Port into the 
fabric of the City.^^ 



wiE largely come from commercial 
development between Fisherman's 
Wharf and China Basin; these 
sources of revenue will also pay for 
creating and maintaining open space. 

With Proposition H preventing 
development until completion of 
the Waterfront Plan, is the Plan 
going to be one of your high priori- 
ties in your first year in office? 

Absolutely! It is the linchpin of ovir 
future success. We need to come up 
with a plan that is rational, realistic, 
and attractive. And then we have a 
duty to educate the citizenry about 
what it is we want to do with this 
wonderful property that's been 
entrusted to us. I am convinced that 
people want to see the proper devel- 
opment of the Port rather than let it 
lie fallow, unused and separated 
from the City as it is now. 

Some people object to develop- 
ment on the northern waterfront 
because they say that we need to 
keep the piers for maritime. What 
do you say to them? 

Well, 1 guess some people have a 
romantic notion of what maritime is. 
In their mind's eye they recall an 
earlier time in San Francisco's histo- 
ry when our piers were full of ships 
and think its practical to restore that. 

About a month ago, shortly after 
being named the Port Director. I was 
at a reception, and a woman who 
lives near the Port asked me what I 
thought I could do to bring maritime 
back to the northern watorfront. I 
first asked her what she meant by 
maritime, and she replied, as most 
people do. "ships and cargo." When I 
asked if she was prepared to accept 
10-story cranes, trucks and train traf- 
fic along the Embarcadero. and the 
lights and the noise that go along 
with serving modern container ships, 
she was not as eager to have shipping 



at those piers. Given that perspec- 
tive, I think most people woxild agree. 

On the other hand, I think there is a 
definite place on the northern water- 
fi"ont for other maritime uses such as 
cruise ships, ferry and excxirsion ves- 
sels, commercial fishing, harbors, etc. 

Do you think that the Port's 
mission is changing? 

Basically I think not, though the allo- 
cations within our mission, for exam- 
ple maritime, are changing. And 
that's because, for a variety of rea- 
sons, the Port of San Francisco is 
evolving: to a very great extent San 
Francisco is now an urban port with 
maritime uses, where Oakland, on 
the other hand, is a working port with 
some cormnercial aspects to it. 
I believe we will stay in the maritime 
business but I also think that the 
Port needs to develop in other ways to 
induce increased revenues so we can 
support maritime uses and open 
space, and ensure that that the Port 
remains the jewel it should be... 
something that San Franciscans can 
be proud of for years to come. 

In terms of support for maritime, 
one of the projects that we have 
been looking at over the last few 
years is the tunnel project. What's 
your view on the priorities for the 
tunnel project? 

As I mentioned earlier, a high priori- 
ty is to keep what shipping lines we 
already have. To keep a major ship- 
ping line like Evergreen we have to 
do the tunnel project. But we also 
have the responsibility when under- 
taking capital projects to ensure that 
they're viable... that we will get a 
return on our investment. 

Unfortimately, another dimension to 
the txmnel project is the fact that 
Southern Pacific Railroad controls the 
rates charged to freight users. To 
make sure that the tunnel project is 



'We^ve got to start 

moving ahead. 
We need to realize 
that there^s 
more risk 
in holding onto 
projects than in 

going ahead 
and doing them. " 



successful, we need to come to an 
agreement with Southern Pacific on 
rates that will be charged to the 
Port's customers. 

Is the Port committed to 
intermodal? 

Yes, however, we recognize that we 
need to do the tunnel project if we are 
going to be a player in the intermodal 
business. Those external factors over 
which we have no control mean we 
have some serious work to do. It's 
also important to realize that our 
cargo facilities are grossly underuti- 
lized and that there are shipping 
lines that aren't dependent on inter- 
modal. We need to work on attracting 
them also. 

At the airport you were responsible 
for development of a large number 
of projects. Do you think that 
expertise is going to be helpful in 
getting to some resolution on these 
infrastructure projects? 

I think from a management stand- 
point, yes. The biggest difference 
between the airport and the Port is 
that the airport had enough money to 
fund its own projects; where here, 
given our financial situation, we have 
to approach projects differently. We 
can approach the state and federal 
governments for grants, but, more 
likely, the bulk of our development 
will be done through a series of joint 
public and private efforts. 

Will the base closures that are 
coming to the Bay Area have any 
impact on the Port? 

I think the most significant develop- 
ment is that Oakland appears to be 
the beneficiary of some new berths 
which increases their capacity to 
attract additional and future ship- 
ping: I see that as a threat to San 
Francisco's efforts to attract CEirgo 
business. 



''People who 
pay us money 
are entitled to 
first-rate service, 



Ship repair is another casualty. With 
fewer military ships in general, and 
the closure of Mare Island and 
Alameda specifically, there is a 
smaller pie for San Francisco's two 
remaining ship repair companies. It 
was not too long ago that five ship 
repair companies operated at our 
Port; I see every reason why the sur- 
vival of the remaining two compa- 
nies is threatened. 



What do you see as the 
priorities for tenants? 

Well, I think that people who pay 
us money are entitled to first-rate 
service, and I want to deliver that 
service. But, more importantly, 
there are also some areas such as 
Fisherman's Wharf that over the 
years who have paid the Port a lot 
of money and probably we haven't 
re-invested in them as we should. 

I think we need to approach 
Fisherman's Wharf with renewed 
vigor, to become full-fledged part- 
ners on projects that ensure it's 
safe and clean so that people can 
feel secure there. We need to make 
sure we support the industries that 
define Fisherman's Wharf. And we 
may even want to help market it, 
to participate with the merchants, 
to see what we can do to attract 
more business. 




Do you see us trying to do 
additional efforts to attract the 
cruise Industry as part of that 
Fisherman's Wharf mix? 

I think so. Like everyone else, 1 
would love to see a new cruise termi 
nal, but I don't realistically see, in 
the very near future, that happen- 
ing. I would like to change some 
laws that would allow for more fre- 
quent ports of call. Specifically, 
those which prohibit foreign-flagged 
vessels from carrying passengers 




between American ports, especially 
since there are only two U.S. flag 
oceangoing cruise ships in the world. 

I believe this particular law served a 
purpose at one time; I question 
whether that reason is valid now. 
Certainly the circumstances have 
changed. There are other ports that 
are in this same situation, and I think 
it's just a matter of time before such 
laws are modified. When they are, 
you will see San Francisco's cruise 
business go through the roof because it 
is such a beautiful city. 

How would you describe 
your management style? 

Crisp but inclusive. 1 like those who 
have initiative and are creative. 
Certainly the Port is in dire need of 
that. On the other hand, where that is 
lacking, I'm happy to provide it. 

Could you explain how this might 
manifest itself in the way you do 
business? 

The Port of San Francisco seems to 
study things to death. In many 
instances some study is both appropri- 
ate and necessary to make the proper 
decisions, but there is a point of dimin- 
ishing returns. In some instances. I 
believe the Port has continued to study 
a project to avoid making a decision. 

We've got to start moving ahead. We 
need to realize that there's more ri.^k 
in holding on to projects than in going 
ahead and doing them. If wo make a 
mistake from time to time, 1 believe 
people 8ire willing to forgive us because 
we're attempting to do something, as 
opposed to doing nothing, which fiois- 
trates people. ▲ 



Income Statement Analysis 



The Port of San Francisco recorded a loss of $1.12 million for fiscal year 1992/93, primarily due to 
reduced shipping traffic and increased expenses. 

OPERATING REVENUES 

Operating revenues decreased 5.6% to $32,086,000. Cargo Services Division accounted for $8,374,000 
or 26.1% of total revenues, down from $10,960,000 in the previous year. Tenant Services Division report- 
ed an increase of $428,000, accounting for $22,130,000 or 68.9% of total revenues. 

Cargo Services' maritime revenues were down 21.3% to $7,548,000, due to a decline in shipping traffic. 
Cargo facility rentals were down 39.7%, primarily due to the termination of the Pier 90 grain terminal 
lease. 

Tenant Services' maritime revenues were down 15.9%, while commercial property rentals were up 3.8%, 
due to increased percentage rentals and higher parking revenues. 

Power sold by the Port was down 1 2.2% to $868,000, and other revenue primarily work for tenants) went 
up 19.8%. 




OPERATING EXPENSES 

Operating expenses increased 4.9% to $31,240,000, the majority of which was in Operations and 
Maintenance which grew 8.9% to $25,240,000 due to additional Port staff, asbestos removal in the 
Ferry Building, drydocking of the fireboat Guardian^ and increased environmental clean-up and 
monitoring costs. Other changes included decreases in depreciation (10.2%), fireboat operations 
(4.3%) and commercial power costs (12.1%). 

Power Power 




Depreciation Fireboat Depreciation Fireboat 

15.6 4% 15.6 3.7% 



OTHER INCOME (EXPENSE) 

The net increase in Other income/(Expense) was primarily the result of a onetime gain associated with 
the sale of equipment. Interest income decreased 9.4% due to the continued decline in interest rates, 
and interest payments decreased 4.7% due to the reduction in long-term debt. 



Statement of Operations 



Years ended June 30, 1993 and 1992 
(in thousands) 

1993 1992 

Operating Revenues 

Cargo Services 

Maritime $7,548 $9,589 

Rental 826 1 ,370 
Tenant Services 

Maritime 1,012 1,203 

Rental 20,250 19,510 

Power 868 989 

Other 1,582 1,321 

Total Operating Revenues 32,086 33,982 

Operating Expenses 

Operations 13,455 12,704 

Maintenance 11,785 10,445 

Depreciation 4,169 4,644 

Fire boat operations 1,136 1,187 

Commercial power 695 791 

Total Operating Expenses 31,240 29,771 

Operating Income 846 4,21 1 

Other Income (Expense) 

Interest Income 1 ,946 2,1 47 

Interest Expense (4,176) (4,383) 

Earthquake damages and expenses (3,1 38) (1 ,757) 

Federal and State earthquake assistance 3,1 38 1 ,757 

Gain on sale of equipment 264 

Total Other Income (Expenses) (1,966) (2,236) 

NET (LOSS) INCOME ($1,120) $1,975 



The full financial statements and Independent auditors' report may be obtained for 70c (18c duplication 
and 52(1; postage) by writing to the Financial Manager, Port of San Francisco, Suite 31 00 Ferry Building, 
San Francisco, CA 941 1 1 . 




Planning 

the Future 




The challenge of planning the 
waterfront is to reunite the water- 
front with the city to make the 
waterfront an everyday part of 
the life of the city and to create a 
new civic place and spirit. 

This fall Port staff put together two 
two-day workshops of local architects, 
urban planners, economists, develop- 
ers, and interested citizens to look 
seriously at the waterfront. The first 
group was tasked with developing a 



"puDiic framework, — a series of guid- 
ing principles that would shape 
futxire planning efforts. They selected 
four key ideas to describe their prin- 
ciples, agreeing that the waterfront 
should: 

• become the City's Promenade, 
providing a continuous unfolding 
experience that reveals the aquatic 
and marine setting and community 
character, history, and potential for 
the future. 



• be the connection to the com- 
munity, all the City's and Bay Area's 
communities, not just the neighbor- 
hoods along the waterfront. 

• act as a large bay window with 
ever-changing views and as a door- 
way from the land to the water, and 
from on the water to the land. 

• be a repository of a collective 
and individual memory that connects 
people to the past and to the present. 




WATERFRONT PLAN TIMELINE 



MAR 



JUNE 



SEPT 



Public Hearings On Options for Change 



Preparation of Draft Plan by staff 



Environmental Review Process 



Approval of Draft Plan by Port Commission 



They also recommended that water- 
front planning must be adjustable, 
allowing response to changing oppor- 
tunities, and that public and private 
actions should be coordinated to cre- 
ate projects that will result in a sub- 
stantial public benefit. They empha- 
sized a need for the plan to be rele- 
vant and connected to the broadest 
possible public. 

The second group took the strategies 
of the first and focused on developing 
illustrative ideas for "strategic nodes" 
at several points along the waterfront. 
Consensus of both groups was that 
you didn't have to do something to 
every pier, just a few, key piers. This, 
it was believed, would create a new 
civic place — sites for ongoing and spe- 
cial events for all to enjoy, economical- 
ly feasible developments that could 
help fund further growth of the Port. 

What's next? The Waterfront Plan 
Advisory Board will fold in the results 
of the workshops to its consideration of 
maritime and non-maritime use 
options. It is expected to recommend 
a draft plan in late April. An exten- 
sive Environmental Review (EIR) 
process will begin about the same 



s. 











time. The EIR will take approximately 
18 months to complete. 

Until the Waterfront Plan EIR is com- 
pleted and certified, no permanent 
non-maritime development can occur. 
However, during this time, the Port 
can begin the process of obtaining any 
regulatory or city planning code 
changes which might be needed to 
facilitate the develoment projects 
which ultimately may be proposed. 




Advisory Board 

member, 

Ann Cervantes, 

participates in 

planning workshop. 



The Port is currently working with 
the Bay Conversation and Develop- 
ment Commission (BCDC) on updating 
the Seaport Plan. Proposed Waterfront 
Plan uses will be examined as part of 
this process, with the goal of making 
the two plans consistent. 

The Draft Waterfront Plan and the 
EIR will not become final until 
certified and adopted by the Port 
Commission and the City Planning 
Commission. ▲ 



This timeline reflects the major elements of work remaining before the final Waterfront Plan can be approved. 




J 





MAR 






JUNE 






SEPT 






DEC 



Public Outreach — Provide information to community organizations, get comments 




Certified EIR ^ 



o Update 



UILDING FOR THE FUTURE 




Infrastructure 
improvements, 
including projects 
underway at 
Fisherman's Wharf, 
the cargo termi- 
nals, and along the 
Embarcadero, are 
key elements in 
the Port's efforts to 
build for the future. 

Last fall, 
Congresswoman 
Nancy Pelosi 
described the 
efforts of the 
City and the 
Port as the 
"Waterfront 
Renaissance" as 
she highlighted 
the Waterfront 
Transportation 
Projects as an 
example of the 
kind of public 
projects everyone 
wants to 
see happen. 

Summarized on the 
next few pages is 
the current status 
for each of the 
major projects. 



Fisherman's 
Wharf 



Pier 45 Earthquake 
Repairs 

Soil stabilization efforts will 
be completed in March, and 
the contract for the final 
repairs for Pier 45's earth- 
quake damage has been 
awarded. This phase is 
'scheduled to begin in April. 
*rhe project includes struc ■ 
tural work, repairs to the 
damaged building utilities 
to achieve code compliance, 
and repaving the pier. When 
completed, the interior of 
Iheds B and D will have 
'fnodem fish proceassing facil- 





I B will be com 




A and ts wui De com 
lleted this fall, and Sheds C 
id D in the spring of 1995. 
jasing plans are being 
jmpleted and negotiations 
rith commercial fish opera- 
tions and fish processors 

11 soon begin for sgaces*in 
Iheds B an( ^ ||| | l ^" 



The improvements will 
include widening the side- 
walk along Jefferson and 
Taylor Streets next to the 
Expo Building, and modify- 
ing existing lighting'lj 

Pier 47A Restorati 

Design work is nearly com- 
plete on the renovation of 
Her 47A, the pier in front of 
Scoma's Restaurant. This 
project, funded by more 
than half a million doll 
a Transportation Efficj^rt 
Act (TEA) grant, is d^ligned 
to provide increased public 



>idewalk improvement! 

The Port has been working 
l^ith Fisherman's Wharf, 
. merchants on a plan to 



^^i^^^^^cess (including spec tac|i^ 
J^Hlkr Golden Gate Bri ' 



Fisheries institute 

Sedwa^ and Associates is 
conducting a feasibility 
study and design concept 
analysis for a Fisheries, 
Institute which ( 
located in Shed C or . 
Pier 45. The institute was 
originally proposed as an 
applied research center, 
directly supporting the fii 
ing industry. It has since] 
evolved into more of a public 
ucation effort, with 
earch facilities, a 
ence centefijCt 
kitchens, anl ai 
market. TheinstifBW 



widen walkways in and 
around the triangle area. 

^Vork in the first phase of 
project is expected to be 

^R)mpleted before the start of 




views) and additiona 
t fishin^lfciat berths 



Ajl^^^^^^^^^s the n^Bs|b^w^eii 
aftiffiRIISHBHBhing anoU(mt4ln^P|||S 



onstruction work is expect- 
to commence later this 
priiig, with the project tak- 
ng approximately six 
months to complete. 



IF 




industries, taking ad/an- 
ftge of the heavy foot traffic 
of the Wharf. 

Three altemativei 
presented to the Port Co 
mission this spring, along 
with recommendations for 



Via 





implementing the project. 
Funding alternatives will be 
examined once a preferred 
alternative is selected. 

Hyde Street Comercial 
Ship Harbor 

In a speech to the 
Fisherman's Wharf 
Merchants Association in 
January, Dennis Bouey 
described the Hyde Street 
Harbor as "absolutely nec- 
essary" for the fishing 
industry. The Port is cxjr- 
rently conducting a feasibil- 
ity analysis and examining 
funding alternatives. A $3 
million California Depart- 
ment of Boating loan is still 
in place, but additional 
grant funding or subsidy 
will be needed to build the 
estimated $5 million project. 

Traffic Congestion 
Management 

The Port has tmdertaken a 
series of programs to 
improve traffic manage- 
ment in the heavily-con- 
gested triangle area at the 
Wharf. The first step was 
the establishment last svim- 
mer of a tour bus parking 
area in the valley between 
the sheds at Pier 45, remov- 
ing buses from the traffic 
lanes near the parking lots. 

The Port Commission has 
also begim to regulate pedi- 
cabs, establishing new cvirb- 
side cab stands. 



Waterfront 

Transportation 

Projects 

South Embarcadero 

Waterside construction 
began in early July and is 
70% finished. Estimated 
completion date is Jxily 
1994. 

North Embarcadero 

Landside construction 
began mid-simmier and will 
continue until late March or 
early April, when bayside 
improvements will com- 
mence. Estimated comple- 
tion of the entire project is 
April 1995. 

MUNI Metro Turnback 

The project began construc- 
tion in September, with 
minor rerouting of traffic. 
In December, Mission 
Street was closed at the 
Embarcadero and passen- 
ger walkways moved while 
tunnel work was imderway. 
The street closure will 
remain in effect imtil mid- 
March. Estimated comple- 
tion of the entire project 
from the Embarcadero 
Station to the new south 
Embarcadero MUNI exten- 
sion line is August 1996. 

Fisherman's Whart 
F-Line Loop 

Design of the first phase 
of construction began in 
September. The second 
phase design will follow, 
with a final construction 




schedule to be developed 
to minimize construction 
impact to Fisherman's 
Wharf Merchants. Con- 
struction will probably 
begin in June 1995. 

Mid-Embarcadero 
Roadway Replacement 
Terminal Separator 

The Environmental Impact 
Review (EIIVEIS) process 
for the Embarcadero 
Freeway replacement 
began in August 1992. 
Terminal Sepeirator 
Structure (TSS) options are 
being examined by the 
Board of Supervisors. If 
new alternatives for the 
TSS are included, publica- 
tion of the draft EIR/EIS 
would delayed until March 
1995. The Citizen's 
Advisory Committee on the 



(CACEP) has created a sub- 
committee tolook at options 
for the redesign of the area 
previously under the 
Embarcadero Freeway from 
Mission to Washington. 
This subcommittee has 
been meeting, but final 
decisions on design cannot 
be made until the Mid- 
Embarcadero roadway 
alternative is chosen. They 
will publish a report on 
land use and implementa- 
tion recommendations in 
July 1994. A 



o Update 



Cargo 
Services 

Tunnel Project 

During 1992 the Port 
was awarded $6.8 mil- 
lion in Intermodal 
Surface Transportation 
Efficiency Act (ISTEA) 
funds and $2.4 million 
in 1-280 mitigation 
funds to construct a 
gauntlet track in two 
tunnels south of the Port, 
allowing access for high- 
cube doublestack trains. 

Kambiz Shadan, from the 
City's Public Utilities 
Commission (UEB), has 
been selected as the overall 
project manager, and, since 
August, he has supervised 
the final project designs. 
Engineering design should 
be completed by March 
1994. 

Construction cannot begin 
until completion of a 
Memorandum of Under- 
standing between the Port 
and the Joint Powers Board 
(an organization made up of 
representatives of San 
Francisco, San Mateo and 
Santa Clara counties). The 
JPB operates CALTRAIN 
between San Jose and San 
Francisco and controls the 
^ right-of-way through the 
tunnels. 




The timnel project will 
involve building a gauntlet 
track between the two 
existing tracks, taking 
advantage of the higher 
clearance at the center of 
the tunnel to accommodate 
trains carrying 9 foot 6 inch 
"high-cube" containers 
stacked two-high. Addition- 
ally, special signalling will 
be installed. 

Construction will take 
approximately one year. 

North Container Terminal 

The modernization of the 
Port's second largest con- 
tainer terminal was com- 
pleted this year, increasing 
overall throughput capabili- 
ty by 50% and more than 
doubling refrigerated con- 
tainer handling capability. 

The entire surface of the 
69- acre terminal was lev- 
eled, re-gpded and 
striped tglq^ommoc 



high-speed transtainer 
operations and allow 
four-high stacking of 
containers. As part of 
the $7 million project, 
utilities were also 
moved underground to 
improve traffic flow and 
enhance safety within 
the facility. The high- 
mast lighting system 
was renovated electri- 
cally and structurally, 
and the total nimiber of 
reefer plugs was in- 
creased to 414, 244 of which 
can handle 440-voltage. 

This is one of the largest 
container terminals in the 
Bay Area, with four gantry 
cranes, 396,000 square feet 
of covered warehouse space, 
and 5090 feet of berths. It ' 
can accommodate up to six 
ships simultaneously. 
RO/RO and breakbulk 
cargo can also be handled 
at this terminal. 

Future improvements 
include annexation of an 
adjacent 30 acres to the 
container yard, rebuilding 
of the gate system to accom- 
modate the new footprint 
and, finally, the construc- 
tion of a bridge connecting 
the terminal to the Port's 
large on-dock intermodal 
rail facility at the South 
Container Terminal. . . - 



Ferry 
Building 

Ferry Building Repairs 
Underway 

The scaffolding in front of the 
F erry Building, a part of the 
facade since the Loma Prieta 
earthquake in 1989, has 
finally come down. This 
marks completion of a por- 
tion of the seismic repairs to 
the building, one element of a 
larger, $1.7 million project to 
make the building safer. 

The Federal Emergency 
Management Agency 
(FEMA) underwriting repairs 
which were a direct result of 
the Loma Prieta earthquake; 
the remainder of the project 
is paid for from the Port's 
operating budget. 

The parapet and facade fac- 
ing the Embarcadero are 
being strengthened, the 
tower reinforced, asbestos 
abated, and the brick work 
along the southern wall 
(facing the Agriculture 
Building) will be removed 
and replaced with a strength- 
ened structure. 

The work, conducted by 
Bame^im Construction 
Co., a minority joint venture, 
is expected to be completed 
later this year. 



Ferry Building Design 
Contract Awarded 

The project to renovate the 
\ Ferry Building has moved one 
i step closer to reality with the 
award of the preliminary 

design and 
feasibility 
analysis 
contract 
by the 
Port 




Commission. A multi-discipU- 
nary team led by James 
Stewart Polshek and Partners 
will develop and analyze three 
design scenarios, including 
conducting design and engi- 
neering studies, market and 
financial analysis, cost esti- 
mating and regulatory 
approval. 

The initial design efforts are 
expected to take five months, 
with a more detailed analysis 
of the preferred alternative 
taking an additional foxor-six 
months. The study, funded by 
a Transportation Enhance- 
ment Activities (TEA) grant 
from the federal government, 
will allow the Port to examine 
several alternatives in order 
to develop a plan that will 
attract the public and private 
investment necessary to con- 
duct the historic renovation. 

The project reflects some of 
the ideas which were dis- 
cussed at a two-day workshop 
held last summer which 
brought together some of the 
City's leading architects and 
urban planners. The concept 
is to enhance the public na- 
ture of the building, empha- 
size the transportation con- 
nections between the ferries 
and other forms of public tran- 



sit, possibly reconstruct the 
second floor "Grand Hall" run- 
ning the length of the bviild- 
ing, and create more access to 
the Bay. 



Ferry Terminal Design 
Contract Awarded 

Roma Design Group has been 
awarded a 





$600,000 con- 
tract for the 
design of the 
second phase 
of work at the 
Doris Kahn 
Feiry Termi- 
nal. The pro- 
ject, which will 
be conducted in 
two stages, con- 
sists of develop- 
ing several 
alternative 

design schemes and layouts 
for the Her 1/2 North Ferry 
Terminal deck, covered walk- 
way, barges and ferry termi- 
nal structure. 

In addition to design, the con- 
tract includes a sophisticated 
analysis of ferry usage, identi- 
fication of landside transpor- 
tation and regulatory issues, 
environment^ engineering 
review, construction strategy 
development, and review of 
preliminary designs 
with the 





Bay Conservation and Devel- 
opment Commission (BCDC). 
This stage of the work is esti- 
mated to take 90 days. 

Once a preferred alternative 
is selected, the second stage 
of the project will be to com- 
plete the design plans, speci- 
fications, and cost estimates 
to enable the Port to solicit 
bids for the actual construc- 
tion. This stage is to take 
no longer than 12 months. 

The Port has secured S8.5 
million from the California 
Transportation 
Commission and 
$5(X).0ai from the 
federal government 
under ISTEA to fund 
the design and con- 
struction of the 
terminal. A 





Scoma's Sets New Standards 
in Fish Preparation 



Ever wonder what goes on in the kitchen of most 
restaurants? Need some ideas for 
. ^ what to do with fish? Just take a 
A walk down Pier 47 and watch 

JH \ the chefs of Scoma's restau- 

rant creating food "art" 
in their brand-new, effi- 
cient fish processing 
station. 



This pierside fish-handhng 
facihty was designed to do 
two things: give the restaurant 
direct access to local fishing boats 
and provide space for proper 
preparation of fish — all in view of 
the public. Now fishermen with a 
good catch can pull alongside the 
receiving station and offload 





Mark Magner unloads fishing boat 
at Scoma's fish receiving station. 




right into the 
fish preparation 
area. 

The fish gener- 
ally are loaded 
into large, walk- 
in reefers — 
refrigerators 
bigger than an aver- 
age bedroom. When 
needed, staff retrieves 

the catch from the reefer and prepares it for the kitchen. 
A large picture window facing the street allows visitors and 
waiting diners to watch the fish preparation — everything 
from butterflying shrimp to carving a 2-foot-long, 15" 
diameter chunk of swordfish into steaks. 

"Scoma's has long been known as a quality seafood restau- 
rant, and with this facility everybody can see exactly what 
we do to get that quality," explains Al 
Scoma, restaurant co-owner. "Some peo- 
ple are afraid to eat fish because they don't 
know how it's been handled. Here they 
can see how fresh our fish is and all the 
precautions we take to ensure that it's 
handled properly." 

The U.S. Department of Agriculture has 
discussed increasing inspections and pro- 
cessing requirements for fish, and Scoma's 
staff believes their new facility already 
exceeds any standards that are planned by 
USDA. The entire seafood preparation 
area is designed for cleanliness — stainless 
steel work surfaces and tile walls, ceiling 
and floor are easily cleaned, and nightly a 
high-pressure wash-down system sanitizes 
the entire work area. A 

Chef Jim Gannon prepares 
fish in the new facility. 



Starporter Crane Grows 



The first of two Starporter cranes at San Francisco's Pier 
94 has just undergone a remarkable transformation, 
growing 17 feet in one day! The top of the crane was 
raised to facilitate handling of larger vessels. 

Cranes have been raised before, however, this is the first 
time that jacking has been accomplished from the height 
of the portal beam (44 feet up the 
side of the crane). Rigging Inter- 
national, of Alameda, CA, the 
prime contractor, made the job 
look easy. 

To accomplish the lift, four jacking 
towers were installed on the sill 
beams at the base of the structvire. 
Using eight hydraulically-operated 
bottle jacks (two per tower), the 
entire structure from the portal 
beam up was lifted nine inches 
with each stroke. The mechanism 
was pinned in place at the new 
height, and the jacks withdrawn. 

These steps were repeated until the 
full 17-foot height extension was 
complete, a process which took 
about three and one-half hours. 




To complete the transformation, new support legs were 
then moved into place and the crane top lowered back 
onto its newly-extended base. The legs were bolted into 
place and additional structural crossbars were added to 
strengthen the tower. As a final step, a new flight of 
stairs was welded into place, providing access to the 
operator's cab and boom. 



In addition to adding new height, 
the Port's crane upgrade project 
calls for load capacity to be in- 
creased to 40 long tons, new tele- 
scopic spreaders to be added, the 
trolley rails maintained and some 
motors and generators over- 
hauled. This will make the 
cranes capable of handling all 
fully-loaded, current generation 
of container ships, including 
Evergreen's new R-class 4,200 
TEU vessels. A 



Crane fitted to new height, await- 
ing installation of new legs. 



At the halfway point 
in the project. 




Blue Star Line Signs New Agreement 



The Port Commission has approved a contract with Blue 
Star Lines (BSL) for its Pacific inter-island service. 



Blue Star's Pacific Island 
Service is a continuation of 
their long-standing relation- 
ship with the Port. These 
ships, which call Rer 80, 
are sep£irate from their joint 
service with Columbus Line. 

This twice-monthly service 
calls at Tahiti, American 
Samoa, and Tonga, and is 
known for rapid transport of 
grocery trades items includ- 
ing frozen poultry, canned 
goods, and fresh California 
produce. 

Radiata pine, clear grade 




liunber from New Zealgmd used in finished carpentry work, 
is also regularly delivered to the Bay Area. 



Because of the time-sensi- 
tive nature of the refriger- 
ated and perishable cargos. 
Blue Star offers shippers 
a free service, called 
StarFax, which allows 
them to receive up-to-date 
arrival and departure 
dates for all BSL ports of 
call. This service is avail- 
able by calling (800) 200- 
BLUE. 

The estimated annual rev- 
enue to the Port for the 
three-year agreement will 
be $120,000. A 



Blue Star vessel loads 
at Pier 80. 



NYK's Margarita Express Adds New Service 



In January, the Port Commission approved a contract for 
Margarita Express, a new service being offered between 
Central America and the U.S. west coast. Margarita 
Express is a bi-weekly service operating between Panama 
and the U.S. with fixed-day scheduled service linking 
ships sailing for the far east. Northbound the line has 
added a call in Salina Cruz, Mexico, a major coffee export 
center. With calls in Costa Rica, Nicaragua, and Guate- 
mala, coffee and sesame seeds are the largest commodities 
handled. 

Margarita Express chose the Port of San Francisco for its 
accessibility to the major coffee roasters and for its status 
as a coffee futures exchange delivery port. Guy Wright, 
U.S. agent for the new service, describes the all water ser- 
vice as "more attractive than the road and rail combina- 



tion now being used via Laredo. This will allow companies 
to ship overweight containers, and it will cut down on the 
extra handling." 

Service on this line is expected to start sometime this 
spring, with ships calling at the South Container 
Terminal. It is estimated that the five-year agreement 
could bring an annual revenue of $200,000 to the Port. 

Margarita Express is a service of Nippon Yushen Kaisha 
(NYK) line. ▲ 



ume: 




NIPPON YUSEN KAISHA 



New Leasing Policies Take Affect 



"For Lease" signs will soon be appearing on vacant Port 
property under a new, aggressive leasing program 
designed to involve commercial real estate brokers and 
generate needed revenue for the Port. 

For the first time, real estate commissions can now be 
paid by the Port to outside brokers who bring in busi- 
ness. This new policy is 
designed to increase interest 
in Port property by commer- 
cial real estate brokers and, 
in effect, expand the Port's 
leasing team to include the 
entire local real estate com- 
mimity. Commissions will 
be paid out of a special fund 
taken from the rent earned 
on the property. 



Port leasing team members: 
(standing) Diane Artz and 
Jennifer Soboi; (seated) Nicl( 
Dempsey, Kiric Bennett, and 
Dorotiiy Schimlce 



Over the peist few months, the Port Commission also 
approved a standardized lease format and has detailed 
lease pohcy parameters that allow the Port's leasing spe 
cialists to negotiate leases without requiring Port 
Commission approval. This is designed to make it possi 
ble for Port staff to respond more quickly to the needs of 
potential renters. ▲ 




Cook Elected Commission President 



Commissioner Preston Cook was 
elected President of the San Francisco 
Port Commission in January, replac- 
ing James Herman. He will serve as 
President of the Commission \mtil 
January 1995. 

Commissioner Cook was appointed to 
the Commission in May by Mayor 
Jordan, replacing Douglas Wong. A 
principal at TRI Realtors, he is active 
in community affairs. He has previ- 
ously served as a consiiltant for the 
California Senate Select Comimittee 
on Maritime Industiy, as field repre- 
sentative to State Senator Milton 
Marks, and as Assistant Director for 
the Western Region of the Co\mcil of 
State Governments. 




In his term as Commission President, 
he indicates he would like to play a 
major advocacy role in developing a 
higher level of maritime activity at the 
Port, maximizing non-maritime rev- 
enue opportunities, working with the 
Waterfront Plan Advisory Board, and 
seeking additional funding for capital 
improvements. 

At the same meeting. Commissioner 
Ann Halsted was elected to a second 
term as Commission Vice IVesidont. 
She is also the FVesidont of SPUR, the 
San Francisco Planning and Urban 
Research association. ▲ 



Preston Cook 



Friends of the Port Set Sail for 1994 



At their last meeting in 1993, the Board of Directors of 
Friends of the Port of San Francisco (FOTP) elected 
new officers: 



The handsome art work sells for $300 and may be viewed 
in the Port main lobby or at Mamone Gallery, 360 
Jefferson. 



President — T. Fergus Moran, Metropolitan California 
Stevedore Co. 

Vice President — Dennis Conaghan, Embarcadero Center 
Secretary — Andrea Cook, Nestle Beverage Co. 
Treasurer — Fritz Arko, Pier 39 
Immediate Past President — Beverly Mills 

Board members retiring at the end 
of the year included Danny Beagle, 
Dan James, Dr. Mimi Silbert, and 
Jay Slattery. In their places four 
new members were named: David 
Colleen, Colleen Architects; Pat 
Farrell, Golden Gateway Center; 
and Tim Noel, JMB Properties. 

Plans for 1994 include continued 
fundraising efforts to support the 
archiving of Port photographs and 
engineering diagrams and further 
public education efforts, including 
free public boat tours. Funds are 

being raised through the sale of a limited edition historical 
lithograph of the Ferry Building (featured in the spring 
edition of WharfSide). 



A fundraising dinner, to welcome aboard new Port Director 
Dennis Bouey and celebrate the 25th Anniversary of the 
Port, is being developed for late March. Details on the 
event may be obtained by calling 673-3879. 



FOTP Annual Fundraising Dinner 



Other projects include 
a public lecture pro- 
gram which is avail- 
able, on request, to 
schools and business 
or community organi- 
zations. The slide 
show is given by FOTP 
Board Members and 
focuses on the histori- 
cal background of the 
Port, current status, 
and future plans. 

FOTP is a non-profit 
organization founded 
to enhance San 
Francisco citizens' awareness of their Port, encourage 
education programs, and preserve the unique history of 
the waterfront. To become a member, or for further 
information, fill out the coupon below. ▲ 




FRIENDS OF THE PORT 

I I I want to support your waterfront educational programs. Please enroll me as an 
official member of Friends of the Port of San Francisco. Enclosed is my donation of: 

I I $10 Q $50 n $100 



Make out your tax-deductible check to "Friends of the Port" and mail it to: 
Friends of the Port, 3100 Ferry Building, San Francico, CA 941 1 1 

Please Print 

Name ! 



Address 



City State Zip 

Phone (daytime) (evening) 

Area(s) of Special Interest 



Sign up Now for Membership! 

^^^^^^ 



iach Saturday 

I a.m. -2 p.m. Ferry Plaza Farmers' Market 





COIT TOWER PLAQUE RESTORED 

in January, Port Commissioner Frank O'Neill and Paul Grady and Ken Maley of 
the Coit Tower Preservation Fund, re-dedicated a bronze plaque honoring the 
maritime history of Telegraph Hill. The plaque, located at the northwest corner 
of the visitor viewing area at the foot of Coit Tower, had originally been present- 
ed to the City in 1961 on the occasion of the maiden call to San Francisco of the 
Peninsula & Orient (P & O) passenger liner SS Canberra, but it was stolen ten 
years later. The ceremonies marked the ship's return to San Francisco on its 
annual round-the-world cruise. 




MV ARKONA MAKES MAIDEN CALL 

The cruise ship Arkona, a joint venture between the former East German DSR 
Lines and the West German Senator Lines, made its first visit to San Francisco 
at the end of January. On hand to welcome Captain Zausch were Commissioner 
Frank O'Neill, Port Commission Vice President Anne Halsted, and Commission 
President Preston Cook. Jergen Traub, President of Senator Linie (USA) and 
Executive Director Dennis Bouey also participated in the ceremonies on board. 




Wharfside 
The Port of San Francisco 
Ferry Building, Suite 3100 
San Francisco, CA 94111 

ADDRESS CORRECTION REQUESTED 



Margaret Waish 

rary 

tllL'^'^^co CA 94102 



1^85 



BULK RATE 
U.S. POSTAGE 
PAID 

PERMIT NC 
11882 
San Francisco 



DOr.' '^^FMTS DEPT. 
OCT 41994 

SAN FRANCISCO 
PUBLIC LIBRARY 



^PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 



\^FINANCIAL STATEMENTS 
AND 

INDEPENDENT AUDITORS ' REPORT 



JUNE 30, 1993 AND 1992 



Yiood 

^ and 



certified public 
accountants 



TOMEI & Chu 

Certihed Public Accountants 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 



FINANCIAL STATEMENTS 
AND 

INDEPENDENT AUDITORS ' REPORT 



JUNE 30, 1993 AND 1992 



CITY TCTZ ZZT.'-^i 17 rrJ-JTCISCO 



i:d?z:.~z:~ .-.~:7C?-S' report 

JUNE 30, 1993 AND 1992 



TABLE OF CONT^rrS 



INDEPENDENT AUDITORS' REPORT 



BALANCE SHEET 



STATEKENT OF OPERATICMIS 



STATQffiNT OF EQ'SZTi 



~2n CF CASH FLOWS 



NOTES TO FI!.7-j:c:.--l STATZZCEZ-S 6-17 



Hood 

and 

Strong 



certified public 
accountants 



101 CnUfomia Street, Suite 1500 
Snti Francisco, CA 94111 
Telephone (415) 781-0793 



TOMEl & CHU 

Certified Pubuc Accountants 



44 Montgomery Street. Suite 2410 
San Franosco. Caufornia 94104 
Telephone (415) 398-4769 
Facsimile (4 1 5) 396-6664 



INDEPENDENT AUDITORS' REPORT 



THE HONORABLE EDWARD HARRINGTON, CONTROLLER, 
CITY AND COUNTY OF SAN FRANCISCO 



We have audited the accompanying balance sheet of the 
PORT COMMISSION, CITY AND COUNTY OF SAN FRANCISCO, PORT OF 
SAN FRANCISCO ("Port") as of June 30, 1993 and 1992, and the related 
statements of operations, equity, and cash flows for the years then ended. 
These financial statements are the responsibility of the Port's management. 
Our responsibility is to express an opinion on these financial statements 
based on our audits. 

We conducted our audits in accordance with generally accepted 
auditing standards . Those standards require that we plan and perform the 
audit to obtain reasonable assurance about whether the financial statements 
are free of material misstatement. An audit includes examining, on a test 
basis, evidence supporting the amounts and disclosures in the financial 
statements. An audit also includes assessing the accounting principles used 
and significant estimates made by management, as well as evaluating the 
overall financial statement presentation. We believe that our audits provide 
a reasonable basis for our opinion. 

In our opinion, the financial statements referred to above present 
fairly, in all material respects, the financial position of the Port as of 
June 30, 1993 and 1992, and the results of its operations and its cash flows 
for the years then ended, in conformity with generally accepted accounting 
principles . 



As discussed in Note 1 to the financial statements, the Port has 
changed its definition of cash and cash equivalents for the statement of cash 
flows . 



September 30, 1993 




PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 

BALANCE SHEET 
JUNE 30, 1993 AND 1992 
(In thousands) 



ASSETS 



1993 



1992 



CURRENT ASSETS: 

Cash and investments, held in City Treasury 

Port operating fund 
Receivables - Net 
Materials and supplies 
Prepaid insurance and other assets 

Total Current Assets 

RESTRICTED ASSETS : 

Cash held in City Treasury: 
Lessee deposits 
Capital outlay 
Investments : 

Bond interest and redemption 
Lessee deposits held in trust 

Total Restricted Assets 



PROPERTY, PLANT, AND EQUIPMENT 
NOTE RECEIVABLE - Net 

TOTAL ASSETS 



Net 



LIABILITIES AND EQUITY 



CURRENT LIABILITIES PAYABLE FROM CURRENT ASSETS: 
Accounts payable and accrued liabilities 
Current maturities of long-term debt 
Accrued bond interest payable 
Deferred grant 

Total Current Liabilities 

CURRENT LIABILITIES PAYABLE FROM RESTRICTED ASSETS: 
Current maturities of of long-term debt 
Accrued bond interest payable 
Lessee deposits 
Deferred grants 

Total Payable from Restricted Assets 

DEFERRED REVENUE 

LONG-TERM DEBT - Net of current maturities 
Total Liabilities 

EQUITY : 

Contributed capital 
Revaluation of property 
Retained earnings 

Total Equity 

TOTAL LIABILITIES AND EQUITY 



19,362 


$ 18,546 


11,452 


8,889 


1,245 


1,453 


803 


918 




Z 7 ■ QUO 


868 


801 


8, 947 


13, 420 


10, 605 


10,241 


1.023 


983 




75 445 


190.502 


187 .123 




605 


244,807 


$242,979 


12, 597 


$ 7,819 


2,255 


2,250 


135 


153 


609 




15.596 


10.222 


1,755 


1,325 


2,318 


2,385 


1,891 


1,784 


16 


75 


5.980 


. 569 


337 




b.l.47S 


h7 . 387 


85.388 


8 3.499 


21,191 


20,132 


56,063 


56,063 


82.165 


83.285 


159.419 


1S9.480 


.244,807 


$242,979 



The accompanying notes are an integral part of this statement 



2 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
STATEMENT OF OPERATIONS 
YEARS ENDED JUNE 30, 1993 AND 1992 
(In thousands) 



1993 



1992 



OPERATING REVENUES: 
Cargo Services : 

Maritime 

Rental 
Tenant Services : 

Maritime 

Rental 

Power 
Other 

Total Operating Revenues 

OPERATING EXPENSES: 
Operations 
Maintenance 
Depreciation 
Fire boat operations 
Commercial power 

Total Operating Expenses 

Operating Income 



$ 7,548 
826 

1, 012 
20,250 

868 
1.582 

32.086 



13,455 
11,785 
4, 169 
1, 136 

695 

31. 240 
846 



$ 9,589 
1, 370 

1,203 
19,510 

989 
1-321 

33.982 



12,704 
10,445 
4, 644 

1, 187 
791 

29.771 

4.211 



OTHER INCOME (EXPENSE) : 
Interest income 
Interest expense 
Earthquake damages and expenses 
Federal and state earthquake assistance 
Gain on sale of equipment 

Total Other Income (Expense) 

NET (LOSS) INCOME 



1, 946 
( 4,176) 
( 3,138) 

3, 138 
264 

( 1. 966 ) 

($ 1, 120) 



2, 147 
( 4,383) 
( 1,757) 

1,757 



( 2.236 ) 
$ 1,975 



The accompanying notes are an integral part of this statement . 



3 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
STATEMENT OF EQUITY 
YEARS ENDED JUNE 30, 1993 AND 1992 
( In thousands ) 



Contributed Revaluation Retained Total 
Capital of Property Earnings Equity 



BALANCES AS OF JUNE 30, 1991 $19,294 $56,063 $81,310 $156,667 



Capital grants 



838 



838 



Net income for the year 
ended June 30, 1992 



1. 975 



BALANCES AS OF JUNE 30, 1992 20,132 56,063 83,285 159,480 



Capital grants 



1, 059 



1, 059 



Net (loss) for the year 
ended June 30, 1993 



( 1. 120 ) ( 1. 120 ) 



BALANCES AS OF JUNE 30, 1993 $21, 191 $56, 063 $82, 165 $ 159, 419 



The accompanying notes are an integral part of this statement. 



4 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
STATEMENT OF CASH FLOWS 
YEARS ENDED JUNE 30, 1993 AND 1992 
(In thousands) 



1993 



1992 



CASH FLOWS FROM OPERATING ACTIVITIES: 
Operating income 

Adjustments to reconcile operating income to net cash 
provided by operating activities: 
Depreciation 

Provisions for uncollectible accounts 

Net deferral (recognition) of deferred revenue 

Insurance proceeds 

Cash received (refunded) from lessee deposits 
Changes in assets and liabilities: 
(Increase) decrease in: 
Receivables 

Materials and supplies 
Prepaid insurance and other assets 
Increase (decrease) in: 

Accounts payable and accrued liabilities 

Net cash provided by operating activities 



846 



4,169 
961 

82 
140 

67 



$ 4,211 



4,644 
83 
98) 



117) 



1,022) 


( 


990 


208 


( 


78 


115 




4 


1,737 


( 2 


473 


7.353 


5 


186 



CASH FLCWS FROM NONCAPITAL FINANCING ACTIVITIES: 
Proceeds from disaster assistance 
Earthquake damages and expenses 

Net cash provided by noncapital financing activities 



1,239 
{ l£i) 

1 -076 



782 



J2Q. 



CASH FLOWS FROM CAPITAL FINANCING ACTIVITIES: 

Acquisition and construction of property, plant and 

equipment 
Capital grants received 
Principal payments on long-term debt 
Interest payments on long-term debt 
Interest income capitalized 
Proceeds from sale of equipment 

Net cash (used) for capital financing activities 



( 6,749) 
1,389 
( 3,575) 
( 5,642) 
680 
2M 

( 13.633 ) 



( 1,690) 
1,183 
( 4,035) 
( 5,884) 
981 



9.4451 



CASH FLCWS FROM INVESTING ACTIVITIES: 

Net (increase) decrease in restricted investments 
Interest income received 

Net cash provided by investing activities 



( 364) 
1-664 



245 

2-228 

2.473 



NET (DECREASE) IN CASH AND CASH EQUIVALENTS 



{ 3,590) 



( 1,466) 



CASH AND CASH EQUIVALENTS: 
Beginning of year 

End of year 



32,767 

$ 29,177 



34.233 
$ 32,767 



The accompanying notes are an integral part of this statement. 



5 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES: 
Organization; 

The Port of San Francisco ("Port") is an enterprise fund of the City 
and County of San Francisco ("City"). A five-member Port Commission is 
responsible for its operation, development, and maintenance. Commission 
members are appointed by the City's Mayor for terms of four years. The 
Port is an integral part of the City, and the accompanying financial 
statements are included as a component of the City's Comprehensive Annual 
Financial Report . 

Prior to February 1969, the Port was owned by the State of California 
("State") and administered by the San Francisco Port Authority, a State 
agency. In February 1969, the Port was transferred in trust to the City 
under the terms and conditions specified in the State statutes of 1968, 
Chapter 1333 ("Burton Act"), as amended, and ratified by the City's 
voters in November 1968. 

Under the terms of the Burton Act, the State Legislature reserved the 
right to amend, modify, or revoke, in whole or in part, the transfer of 
lands in trust, provided that the State would then assume all lawful 
obligations related to such lands. 

Port's revenue is derived from both property rental and maritime 
operations which includes dockage, wharfage, demurrage and crane rental. 
The Port categorizes its customers between cargo services and tenant 
services based on the primary service need of the customer. 
Substantially all of the Port's property rental customers are located in 
the City. 

Materials and Supplies: 

Materials and supplies are used for construction and maintenance of 
Port facilities and are stated at cost, on a first-in, first-out basis. 

Restricted Assets : 

Bond interest and redemption represent funds accumulated for debt 
service payments over the next twelve months and funds set aside to make 
up potential future deficiencies. The funds are held by the bond 
trustees . 

Capital outlay funds are restricted for use in construction, 
acquisition of equipment, and earthquake repairs, due to restrictions 
from federal assistance and bond resolutions. 

Property. Plant and Equipment ; 

Land transferred to the City in February 1969 is stated at an eunount 
which includes an increase over historical cost of $56,063,000. This 
amount was recorded by the State in prior years to reflect appraised 
values in 1929 and is reflected separately in the statement of equity. 
The Port's management estimates that the fair market value of such land 
significantly exceeded recorded amounts at the time of the transfer. 



6 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued) : 

Property . Plant and Equipment (Continued) : 

Other property, plant and equipment is carried at cost or at fair 
market value at the date received in the case of property received by 
donation or by termination of a lease. 

Depreciation is computed by use of the straight-line method over the 
estimated useful lives of the assets. Land improvements (principally 
pavement and railroad tracks) with a cost of approximately $18 million 
are not depreciated because, in the opinion of management, the assets 
will be maintained to provide indefinite useful lives. Maintenance and 
repairs are expensed as incurred. 

Interest paid on bond funds used for construction purposes, less 
interest earned on the temporary investment of the proceeds of such tax- 
exempt borrowings, is capitalized from the date of borrowing through the 
construction period. 

Contributed Capital : 

The Port has, at various times, received federal and state grants and 
funds from other external sources for construction of waterfront 
facilities. The funds are recorded as contributed capital in equity. 

Statement of Cash Flows: 

In 1993 the Port considered, for purposes of the statement of cash 
flows, all unrestricted and restricted cash and highly liquid investments 
with maturities of three months or less, when purchased, to be cash 
equivalents. In addition, the Port considered its deposits with the City 
Treasurer (See Note 2) to be demand deposits and therefore cash for the 
purposes of the statement of cash flows. 

In prior years, the Port excluded restricted assets from its 
definition of cash equivalents. The new definition was adopted to 
improve disclosure of activities affecting cash flows. The prior year 
statement of cash flows has been restated to apply the change. 

Reclassifications : 

Certain reclassifications of prior years' balances have been made to 
conform with the current year presentation. 



7 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 2 - CASH AND INVESTMENTS: 

The Port maintains its operating fund cash and investments and a 
portion of its restricted asset cash and investments as part of the City's 
pool of cash and investments. The City's pool is invested pursuant to 
investment policy guidelines established by the City Treasurer. The 
objectives of the policy are, in order of priority, preservation of capital, 
liquidity, and yield. The policy addresses soundness of financial 
institutions in which the City will deposit funds, types of investment 
instruments as permitted by the California Government Code, and the percentage 
of the portfolio which may be invested in certain instruments with longer 
terms to maturity. In addition, a City ordinance prohibits deposits and 
investments with financial institutions having specified relations with either 
the government of South Africa or certain private entities doing business with 
or in South Africa. The Comprehensive Annual Financial Report of the City 
categorizes the level of risk associated with the City's pooled cash and 
investments . 

At June 30, 1993 and 1992, investments held for bond interest and 
redemption payments by trustees include $10,605,000 and $10,241,000, 
respectively, invested in a U.S. Agency government fund. The cost 
approximates market value and the investments may be withdrawn on demand. 

At June 30, 1993 and 1992, lessee deposits held in trust include 
$956,000 and $970,000, respectively, invested in short-term, renewable 
certificates of deposit. The cost approximates market value and the deposits 
are insured and held by the Port in its own name. 



NOTE 3 - RECEIVABLES: 

At June 30, 1993 and 1992, receivables consisted of: 

1993 1992 
(In thousands) 

Trade accounts receivable $ 3,574 $ 3,902 

Less allowance for doubtful accounts ( 716 ) ( 410 ) 





2, 


858 


3, 492 


City and County of San Francisco 


1, 


239 


114 


Accrued interest receivable 




558 


690 


Other receivables 




380 


155 


Grants receivable 


1. 


009 


789 


Federal and state disaster assistance 








receivable 


5. 


4Q9 


3.649 




$11, 


452 


$ 8,889 



As discussed in Note 12, the federal and state disaster assistance 
receivable represents the excess of approved federal and state assistance 
relating to the Loma Prieta earthquake over assistance and insurance eimounts 
received to date. 



8 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 4 - NOTE RECEIVABLE: 



The note receivable relates to deferred rent granted to a current 
tenant under a lease amendment in 1985. The note accrues monthly interest at 
a rate equal to the Bank of America prime rate plus two percentage points. 
The note including accrued interest was due on January 1, 1992. 

The tenant's current lease extends to 2017. In 1993, the Port 
conducted a cash flow study of the underlying property. Based upon this 
study, the Port determined that a significant increase in rents from the 
property was needed to generate sufficient cash to repay the note. Therefore, 
the Port has provided an allowance of the entire balance, $655,000 at June 30, 
1993 . 



NOTE 5 - PROPERTY, PLANT, AND EQUIPMENT: 

At June 30, 1993 and 1992, property, plant and equipment consisted 



of 



Estimated 





1993 


1992 


Useful Life 




(In 


thousands ) 


(Years) 


Land and land improvements 


$ 113, 136 


$ 113, 136 




Buildings, structures and 








related improvements 


173, 395 


171, 352 


5-59 


Equipment 


4, 525 


4. 149 


5-25 


Total 


291, 056 


288, 637 




Less accumulated depreciation 


110.437 


106.325 




Net 


180, 619 


182, 312 




Construction work, in progress 


9. 883 


4. 811 




Total 


$ 190, 502 


$ 187, 123 





Total interest cost was $5,655,000 and $5,898,000 for fiscal years 
1993 and 1992, of which $1,479,000 and $1,515,000 was capitalized, 
respectively. Total interest earned was $2,626,000 and $3,128,000 for fiscal 
years 1993 and 1992, of which $680,000 and $981,000 was capitalized, 
respectively . 

The cost of fully depreciated assets still in use was approximately 
$67,300,000 and $58,900,000 at June 30, 1993 and 1992, respectively. 



9 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES: 

At June 30, 1993 and 1992, accounts payable and accrued liabilities 
consisted of: 

1993 1992 
(In thousands) 



Accounts payable 


$ 1,886 


$1, 052 


Due to the City and County of San Francisco 


901 


426 


Current portion of deferred revenue 


116 


50 


Accrued liabilities 


934 


796 


Accrued payroll and related costs 


2,358 


2, 068 


Accrued earthquake related expenses (see Note 12) 


6. 402 


3.427 




$12, 597 


$7, 819 



NOTE 7 - LONG-TERM DEBT: 



At June 30, 1993 and 1992, long-term debt consisted of 



General Obligation Bonds : 

State of California: 
Fifth Seawall 1958, 
Series F, G, and H 

City and County of 

San Francisco - Harbor 
Improvement 1971: 
Series A 
Series B 

Total General 

Obligation Bonds 



Interest 
Rate 
(%) 



4.50 - 5.25 
6.3 



Fiscal 
Year Last 
Series 
Matures 



Balance 



1993 1992 
(In thousands) 



2.50 - 4.85 1999 $ 4,000 $ 5,055 



2003 
2005 



8, 000 
4-800 

16. 800 



8, 800 
5.20Q 

19.055 



Revenue Bonds : 

Series A 1969 
Series B 1971 
Series C 1984 

Total Revenue Bonds 

Total Long Term-Debt 

Less : 

Current maturities 
Unamortized discount - 
Revenue Bond Series C 



7.2 1999 
5.5 2001 
9.50 - 11.5 2009 



6, 100 
4,900 
4Q. 73 (? 
51.730 
68, 530 

4,010 
I . 04 ^ 



6,700 

5, 000 
41.350 

53.050 

72, 105 

3,575 
1. 143 



Net Long-Term Debt 



$ 63, 475 



$ 67, 387 



10 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 7 - LONG-TERM DEBT (Continued) : 



The bonds mature as follows: 



Year Ending June 30; 
(In thousands) 



City and County 
State of of Revenue 

California San Francisco Bonds 



Total 



1994 
1995 
1996 
1997 
1998 
Thereafter 



1, 055 
1, 045 
670 
660 
285 
2^ 



1,200 
1,200 
1,200 
1,200 
1,200 
6.800 



; 1,755 

1, 925 

2, 120 
2, 455 
2, 685 

40.790 



010 
170 
990 
315 
170 



47.875 



$ 4,000 



$12, 800 



$51,730 



$ 68, 530 



The revenue bonds are collateralized by the net revenues of the Port, 
as defined by the bond resolution, are subordinated to the general obligation 
bonds of the State, and are on a parity with any future revenue bonds. The 
general obligation bonds issued by the City are subordinated to the revenue 
bonds and any future revenue bonds . 

The revenue bonds require that budgeted net revenues of the Port, as 
defined, be at least 1.3 times the debt service requirements of such bonds for 
the following twelve months. Certain bond resolutions require that the Port 
maintain funds for the purpose of accumulating assets which are restricted to 
interest and principal payments. Such resolutions prescribe the amounts to be 
accumulated and the types of securities in which the restricted assets may be 
invested, as discussed in Note 2. 

Under the terms of the revenue bonds covenants, insurance proceeds 
may be used for reconstruction of the property or for construction of related 
property. If the proceeds are not used for those purposes, they must be 
applied to the redemption of bonds as provided in Article III, Port Commission 
Resolution Number 5231. At both June 30, 1993 and 1992, restricted capital 
outlay funds included unexpended fire insurance proceeds of $1,451,000. 



NOTE 8 - OPERATING REVENUES - PROPERTY RENTALS: 

The Port leases property and facilities to others. These leases 
provide for either a 30-day cancellation or for retention of ownership by the 
Port at the termination of the agreement. Accordingly, all leases are 
accounted for as operating leases. 



11 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 8 - OPERATING REVENUES - PROPERTY RENTALS (Continued) : 

Certain of the Port's property rental agreements specify rental 
payments based on a percentage of tenant sales, subject to a minimum amount. 
Property rental revenues were comprised as follows: 



1993 1992 
( In thousands ) 

Minimum rentals $17,057 $17,496 

Percentage rentals 4.019 3.384 

$21, 076 $20, 880 



Minimum future rental income under noncance liable operating leases 
having terms in excess of one year are as follows: 

Year ending June 30: 
(In thousands) 



1994 $ 10,491 

1995 10,303 

1996 9,924 

1997 9,507 

1998 8,429 
Thereafter 184 . 123 

Total $ 232, 777 



The approximate cost of property subject to operating leases and 
property held for lease at June 30, 1993 consisted of: 

(In Thousands) 

Land and land improvements $ 47,297 

Buildings, structures, and related improvements 

(at cost, less accumulated depreciation of $102,000) 57 . 478 

Total $ 104,775 



12 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



9 - EMPLOYEE BENEFIT PLANS: 
Retirement Plans: 

a. City and County of San Franclaco: 

The City has a defined benefit retirement plan (The Plan) which is 
administered by the San Francisco City and County Employees' 
Retirement System (Retirement System) . This note contains condensed 
information on the Plan. More specific information, including ten- 
year historical trend data which provides information about progress 
made in accumulating sufficieat assets to pay benefits when due, can 
be found in the financial statements and supplemental schedules of 
the Retirement System. The Plan covers substantially all full-time 
employees of the Port along with other employees of the City. The 
Plan provides retirement, death and disability benefits. Benefits 
are based on specified percentages of average final compensation and 
length of service, with annual cost-of-living adjustments after 
retirement . 

The Plan is financed primarily by (a) contributions from the City, 
which includes contributions from the Port, (b) employee 
contributions, and (c) income from investments. Pension expenditures 
of the City, including that of the Port, are based on rates set by 
the Retirement Board of the Retirement System. Annual contributions 
to the Plan are equal to amounts accrued for pension expense and 
include amortization of past service costs through June 30, 2000. 
Additional liabilities generated by recent Charter amendments are 
amortized over the 20 year period beginning with the year of 
amendment . 

In November 1991 the voters approved Proposition A, "The Early 
Retirement Program." Under the program, three years of age and three 
years of service were added when calculating the service retirement 
benefits for all miscellaneous members who elected to retire during 
the period February 1, 1992 through March 30, 1992. Approximately 
1,800 City and County employees retired under the program. 

In November 1992, the voters approved Proposition F, "Retirement 
Allowance Increase." Under the program. Miscellaneous members who 
retired before July 2, 1991, will receive an increase of $3 a month 
for each full year of retirement, up to a maximum of $7 5 a month. 

The latest actuarial valuation of the Retirement System was 
completed in January 1993 by the actuarial firm of Towers Perrin and 
was based upon employee data and asset information as of June 30, 
1992. The significant economic assumptions used in the valuation 
include: (1) an annual return on investments of 8%; (2) inflation 
element in wage increases of 5.5%; (3) salary merit increases ranging 
from 0.5% to 9%; (4) post retirement benefit increases based on 
required annual cost-of-living adjustments which are a maximum of 2% 
per year for 75% of retirees and over 90% of active members. 



13 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 9 - EMPLOYEE BENEFIT PLANS (Continued) : 
Retirement Plans (Continued) : 

a. City And County of San Francisco (Continued) : 

The wage inflation assumption used in the June 30, 1992 actuarial 
valuation was decreased from 6% at June 30, 1991 to 5.5%. This 
change in actuarial assumption reduced the Plan's pension benefit 
obligation by $210 million. 

The following information is presented as a result of this valua- 
tion as of June 30, 1992 and includes substantially all City fund 
groups : 

( In Thousands ) 

Pension benefit obligation $5,200,780 

Net assets available for benefits at cost 

(market value $5,3 03,03 9) 4. 894.708 

Unfunded pension benefit obligation $ 3 06,072 



The Early Retirement Program and the Retirement Allowance Increase 
have increased the pension benefit obligation by $99.2 million and 
$37 million, respectively. Both increases have been reflected in the 
June 30, 1992 actuarial valuation. 

The City (including the Port) met the actuarially determined con- 
tribution requirements for the years ended June 30, 1993 and 1992. 
Pension costs relating to the Port were $1,209,000 and $1,195,000 for 
1993 and 1992, respectively. 

b. State of California: 

The Port also contributes to the California Public Employees' 
Retirement System (PERS), an agent multiple-employer public employee 
retirement system that acts as a common investment and administrative 
agent for participating public entities within the state of 
California. Certain employees who commenced their employment at the 
Port prior to February 1969 are eligible to participate in PERS. 

Participating employees are required to contribute 7 percent of 
their salary to PERS. The Port is required to contribute the remain- 
ing amounts necessary to fund the benefits for its members, using the 
actuarial basis recommended by PERS actuaries and actuarial consul- 
tants and adopted by the Board of Administration. 

The Port's contributions to PERS totalled approximately $11,000 
and $10,000 for 1993 and 1992, respectively. The City's Office of 
the Controller Comprehensive Annual Financial Report contain disclo- 
sures for all covered City employees. Amounts for the Port are not 
separable from the City totals. 



14 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 9 - EMPLOYEE BENEFIT PLANS (Continued) : 

Deferred Compensation Plan ; 

The City offers its employees a deferred compensation plan created in 
accordance with Internal Revenue Code Section 457. The Plan, available 
to all Port employees, permits them to defer a portion of their salary 
until future years. The deferred compensation is not available to 
employees until termination, retirement, death or unforeseeable 
emergency . 

All amounts of compensation deferred under this plan, all property 
and rights purchased with those amounts, and income earned (until paid or 
made available to the employee or other beneficiary) are solely the 
property and rights of the City and County, subject only to the claims of 
the City and County's general creditors. Participants' rights under the 
deferred compensation plan are equal to those of general creditors of the 
City and County in an amount equal to the fair market value of the 
deferred account for each participant. 

The amount of assets and related participant obligations for Port 
employees is not separable from the total City plan. The total plan 
assets and obligations are accounted for in an agency fund of the City 
and are included in the City's Comprehensive Annual Financial Report. 
The amounts deferred by Port employees totalled $243,000 and $199,000 for 
1993 and 1992, respectively. 

Health Care Benefits ; 

Health care benefits of Port employees, retired employees and 
surviving spouses are financed by beneficiaries and by the City and 
County through the City and County of San Francisco Health Service 
System, a nonexpendable trust fund. The Port's contribution, which 
amounted to approximately $511,000 and $448,000 in fiscal years 1993 and 
1992, respectively, is determined by Charter provision based on similar 
contributions made by the ten most populous counties in California. The 
cost of providing benefits for the retirees is not separable from the 
cost of providing benefits for the active employees. The Port's 
liability for both current employee and post retirement health care 
benefits is limited to its annual contribution. 



NOTE 10 - RELATED PARTY TRANSACTIONS: 

The Port receives services from, and provides services to, various 
City departments. The cost of services received, included as operating ex- 
penses in the financial statements, was approximately $4,495,000 in 1993 and 
$4,048,000 in 1992. Services provided, included in operating revenue, 
amounted to approximately $616,000 and $570,000 in 1993 and 1992, respec- 
tively. Receivables and payables relating to such transactions are disclosed 
in Notes 3 and 6, respectively. 



15 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



11 - COMMITMENTS, LITIGATION AND CONTINGENCIES: 
Conunitments : 

The Port is presently planning various development projects which in- 
volve a commitment to expend significant funds. The Port had firm 
purchase commitments at June 30, 1993 for approximately $3,689,000 for 
capital projects and $499,000 for general operations. 

Litigation: 

The Port is a defendant in various lawsuits; most deal with personal 
injury or property damage resulting from accident or fire and are 
covered by insurance. In the opinion of counsel the likelihood of an 
unfavorable outcome is probable in some of the suits and, accordingly, 
accrued liabilities include the aggregate amount of deductibles under 
applicable insurance policies. However, a substantial number of the 
lawsuits are in the discovery stages and counsel to the Port cannot 
express an opinion as to the possible outcome of such litigation. The 
ultimate resolution of such matters is not expected to have a material 
effect on the Port's financial position or results of operations. 

Contingencies : 

Discretionary Reserves: 

In September 1992, the California State Legislature amended the 
Public Resources Code (The Code) , enabling the City to transfer 
discretionary reserves from the Port to the City. The Code defines 
discretionary reserves as the greater of (a) 25% of the Port's total 
current assets less total current liabilities ("working capital') 
reported in the most recent audited financial statements made public 
prior to June 30, 1992 and each year thereafter, or (b) $4 million. 
After the Port certifies the amount of discretionary reserves, the 
City has the option of transferring any or all of such reserves on or 
before March 31, 1993 and each March 31 thereafter until the 
provision is repealed. The provision will remain in effect only 
until June 30, 1994 and as of January 1, 1995 is repealed. 

The amount available for transfer before March 31, 1994 would be 25% 
of working capital as of June 30, 1992, or approximately $4.9 
million. The 25% of working capital is approximately $4.3 million as 
of June 30, 1993. This amount would be available for transfer on or 
before January 1, 1995. 

During fiscal year 1993, the City Board of Supervisors approved a $1 
million transfer under the provision of the Code. Subsequently, 
based on an opinion from the City Attorney that the transfer was 
unconstitutional, the Board of Supervisors approved the return of the 
funds to the Port. The $1 million was returned in June 1993 and the 
City has made no further requests for transfers of reserves from the 
Port . 



16 



PORT COMMISSION 
CITY AND COUNTY OF SAN FRANCISCO 
PORT OF SAN FRANCISCO 
NOTES TO FINANCIAL STATEMENTS 
(Continued) 



NOTE 11 - COMMITMENTS, LITIGATION AND CONTINGENCIES (Continued) : 

Contingencies (Continued) : 
Grants : 

Certain grants that the Port receives are subject to audit and final 
acceptance by the granting agency based upon their review of costs 
incurred. 

Concentration of Credit Risk: 

The Port leases facilities (commercial and maritime) to businesses, 
substantially all of which are located in San Francisco. The trade 
accounts receivable relate to such activities. 

Environmental : 

The Port has been ordered by the California Regional Water Quality 
Control Board to close certain landfills with a water unimpregnable 
surface. The Port estimates the cost to close the specified 
landfills to be in the range of $8 to $10 million. 

The Port has signed an agreement with the Bay Conservation 
Development Commission concerning a certain pier. The Port has 
agreed to prepare engineering plans to develop the pier as a par)c and 
wetland area. In addition, the Port has agreed to obtain funding for 
the construction from internal and/or external sources by June 1995. 



NOTE 12 - EARTHQUAKE DAMAGES: 

The Port suffered damage from the Loma Prieta earthqua)ce which 
occurred October 17, 1989. All damaged property and infrastructure have been 
identified. The Port expects to repair all earthquake-related damages, which 
is currently estimated to total $9,655,000. As of June 30, 1993, $3,253,000 
has been expended. These estimates do not include costs relating to seismic 
upgrades, retrofitting or other improvements. 

The Port has been granted $9,655,000 in Federal and state emergency 
assistance of which $4,107,000 has been received to date. The Port has 
recorded a receivable in the amount of $5,408,000 which represents the 
remaining amount of approved Federal and state assistance which the Port 
intends to utilize to repair and replace its property and infrastructure, less 
assistance and insurance amounts received to date. 

The approved Federal and state emergency assistance will expire 
October 17, 1993. The Port has recently requested extensions, on all of its 
repairs, through fiscal year ending June 30, 1996. The Port has not received 
confirmation of an extension to date but believe the extensions will be 
granted. 



17 



TTie Waterfront Plan Advisory Board 




In November 1 990, the voters of 
San Francisco approved Proposition H 
which mandated die preparation of 



a waterfront land use plan for the Port's 7 'h miles 
of waterside properties from the Hyde Sueet Pier 
to India Basin, and placed a moratorium on new 



non-maritime development, on 




piers and widtin 1 00 feet of the shoreline. 
To ensure a comprehensive planning process, the 
Port Commission extended the scope of the plan 
to include all Port properties, and created the 27 
member Waterfront Plan Advisory Board ("Advisory 

Board") composed of interested 
citizens; maritime. Port tenant, labor union, and 
neighborhood representatives; organizations, 
architects, planners and other professionals. 
The Advisory Board held public meetings twice 
mondily for over three years, during which time 
it conducted an intensive analysis of all regulatory. 



environmental, land use and 




financial issues affecting Port land use, prior to 
recommending a draft plan for Port Commission 
review.The Advisory Board will continue to meet 
quarterly until the final Waterfront Land Use Plan 
is adopted in late 1996 * 




People, 

Tonertv, 

^ 4c, Port 
Facilities 

Tlie primary ingredients that 
make up today's Port of San Francisco. 





t7 'A miles of the world's most breathtakiitg 
atid spectacular waterfron t tisias - 
Unique locations that introduce and identify 
San Francisco, helping to make it a world- 
renowned city - 
Facilities and massive capital investments that 
support the commerce and practices linking 
the City with the very historic roots that have 
s-pawned its iinujue cliaracter - This is the 
physical Port of San Francisco. 

tBUT it's the people behind the scenes - the nearly 
200 members of the Port Staff pictured here and on the 
cover - that oversee and maintain the physical, making 
it work for our more than 300 tenants wlxo utilize Port 
facilities to conduct commerce and maritime 
enterprise aaoss 15 different industries. 

It's to the Port's greatest asset - its people - 
thai we dedicate this publication ♦ 




TABLE OF CONTENTS 

TTie San Frandsco Port Commisaon 2 

Sen/or Port Staff 3 

TTie Executive Dinctoi's Report 4 

Proposition P 5 



irdLdndlhePlan 6 

Wate/front Transportation Projects 8 



WofkineTaward Revitalizing The Port / / 

Industr/ Deve/of>ments 

Salttrtg High: Cnme Business at San Frandsco 12 

The Port of San Frandsco Goes Way Beyond Cotrtainers . . 13 

BrinpngThe Fish Back to fUierman's Wharf 14 

San Frandsco Ship Repair , . . .^^^^ . .v.._a 'J 





PORT Of SAN FRANCISCO 1994/95 ANNUAL REPORT ( 



The Port of San Francisco is 
governed by a five nnennber 
Board of Comnnissioners, 
eacli of w/iom is appointed 
by the Mayor subject to confir- 
nnation by the City's Board of 



Supervisors. Each member is 



PRESIDENT Preston Cook 

"I'm looking forward to providing the continuity that can help the Port 
staff achieve their goals of increasing Port income in the near term, and 
providing a stable foundation upon which the waterfront's plan needs 
to grow." 

Elected to his second one year term as president in 1995, Mr Cook 
has served as a commissioner since May 1993. Associated withT R I 
Realtors for more than fourteen years, 
he has been involved in the evolution of 
the Van Ness corridor from "Auto Row" 
to mixed-uses, and founded the Van Ness 
Avenue Association in 1983 as a result. 
He has actively participated in the resolu- 
tion of many environmental issues, and 
has published numerous articles on 
responsible hazardous waste manage- 
ment and other topics of environmental concern. Commissioner 
Cook also manages a real estate and business investment group. 




appointed for a four-year term. 



In 1 994, two commissioners 



completed their terms: Ming 



Chang-O'Brien, who served one 



term of two years, and James R. 



Herman, who contributed twelve 



years of dedicated service. Our 
most sincere thanks on behalf 
of the City the Port, and the 
People of San Francisco goes 



out to them. 



VICE PRESIDENT Frankie G. Lee 

"Son Francisco's maritime traditions have historically been beyond the 
core business of cargo in containers. Ship repair, commercial fishing, 
pilotage, recreational boating and passenger services are but some of 
the many businesses that have always comprised maritime in our 
midst. I will carry forward the tradition-rich aspects of our seaport and 
work toward expanding its maritime use, bringing people to the water- 
front for commerce and enjoyment" 

After joining the Port Commission in 1994, Commissioner Lee was 
unanimously voted in to the position of Vice President by his col- 
leagues in less than one year: A true vote of confidence. He brings 
extensive practical experience to the Commission body as Chief 
Executive Officer of SOH & Associates, 
Structural Engineers, a firm specializing 
in the design and retrofitting of building 
and bridge structures. A founder and 
current Vice Chairman of the Board of 
the Trans Pacific National Bank of San 
Francisco, he has contributed his many 
technical and managerial insights 
toward the infra-structural issues facing 
our changing waterfront. Mr Lee continues to be active in local 
minority business development programs, including the California 
Minority and Women Businesses Coalition, the Council of Asian 
American Business Association, Chinese for Affirmative Action, the 
Caltrans Business Council, and the Chinese American Democratic 
Club of San Francisco. 





2 PORT OF SAN FRANCISCO 1 994195 ANNUAL REPORT 




PORT ADMINISTRATORS 

r - ■■ Dennis P.Bouey 

benjamin A. Kuir 

<ii Opemtions, Emlio R. Qvz 

DnectQi, Planning & Devetopmeni; 
' - -ror, Lee Polledfi 

~e:-.ant & Man""-/:' - --^s. 
White 

Manager. Government & Public Affairs. 
Veronica Sanchez 

Manager, Marketing Carolyn Macnvllan 
General Counsel, Julie Van Nostem - 

PRODUCTION NOTES 

Published by the Port of San Francisco 

Editor. Carolyn Maanillan 

Managing Editor. G. L Roybal 

Correspondents I Contributors. 
Anne Cook, Ernilio Cruz 
Peier Doiley Sharon Lee Polledii 

Design I Pre-Piess Pioducoon 
Kathy Nelson Design 
Son Francisco 

Photography 

Outer Cover. MaikSi\yilei 
Inner Cover: Robert T. Cameron 
Center Spread: TomPaiva 
Other Contnbutois: 

Ernilio Crux 
jon Lent/ 

Lance Lougee 

Charles Mitchell 

Tom Puivo 

Gerry Roybal 

Jypogmphy & P'lnnn ' 
NORCAL ' 
San Ffonosco 



COMMISSIONER Ann Haisted 

Appointed as Commissioner in 1 984, Ms. Haisted has served the 
Port for the past eleven consecutive years. A former Vice President 
of U.S. Leasing, she has contributed her 
business acumen and skills and has lent 
her keen insights into achieving the bal- 
ances that need to be achieved 
between business, civic, and community 
interests. Commissioner Haisted also 
currently serves on the boards of the 
City Club of San Francisco; the External 
Steering Committee for San Francisco 
State University's Urban Institute; the 
Institute on Aging; as President of the San Francisco Planning and 
Urban Research Council; and is a founding member of the Business 
Executives for National Security (BENS), a national, non-partisan 
group of business and professional men and women whose goals 
are to bring business discipline to Pentagon planning and spending. 




COMMISSIONER Mike Hardeman 



A third generation San Franciscan trained as a journeyman sign 
painter and pictorial artist, Mr Hardeman has been heavily involved 
in local labor unions, serving as a delegate to the All Bay Labor & 
Building Trade Council since 1973, and 
currently serving on the Executive Board 
of the San Francisco Labor Council. 
Although the newest appointee to the 
Port Commission, Mr Hardeman brings 
an abundance of experience as a San 
Francisco Commissioner: For the last two 
years, he has served on the Public Utilities 
Commission, and from 1 987 - 1 989 he 
served on the Human Rights Commission. 
Aside from his public service. Commissioner Hardeman donates 
countless hours to many local organizations and worthwhile causes. 




COMMISSIONER Francis J. O'Neill 



As President and Chief Executive Officer of Menlo-O'Neill 
Associates, an investment banking and joint ventures firm, Mr 
O'Neill lends keen analytical and development skills to the balance 
of the Commission. He has served previously as chief financial offi- 
cer for the Menio Group, and has been 
associated with GTA, Inc., Armando 
Investments (a commercial real estate 
company), and Clarke & Cramer Inc., an 
1 ^^^JB^K^ma^M industrial and commercial real estate 
i^^^^^^ S^^^^l firm. Mr O'Neill is the past chairman of 
the San Francisco Cork Sister City 
Committee, the program chairman of 
the San Francisco Rotary Club, and a 
founding member and past president of 
the Hibernian Newman Club of San Francisco. 




Executive Director's Report 



^^^^ This year has been an exciting and difficult time 
^^^^B for the Port of San Francisco. The short term repre- 
^^^V sented the problems of a budget deficit of $2.5 
million and reorganization of the Port's infrastruc- 
■V ture. Both of these challenges required immediate 
■ ■ attention and difficult decisions, which unfortunately 
• included budget cuts and downsizing of staff. 
The Port was able to improve its revenue base by increasing 
the number of commercial leases from 70 in 1 993/94, to 
I 73 in 1 994/95. By developing a short term survival strate- 
gy which would address this year's problems, we managed 
to end the year with a net profit of$ 3,001 ,000. This short 
term strategy enabled us to focus on our long term goals. 

Cargo has been an ongoing effort. Over the last several 
years, several intermodal container carriers have left San 
Francisco for Oakland due to rail accessibility, proximity to 
cargo sourcing, and a geographic and demographic advan- 
tage. We have rethought our maritime strategies to adapt 
to the changing market, and are now focusing our efforts 
towards intermodal companies that can benefit from the 
features at our facilities, and can appreciate our financial 
incentives. We are also heavily targeting non-intermodal 
carriers in the niche, break bulk and project cargo area. 

This year, we have seen a tremendous amount of progress 
made toward the Draft Waterfront Land Use Plan, which 
was approved by the Port commission this year, after four 
years of exhaustive work by the citizen-based waterfront 
Advisory Board and Port staff.The Environmental Impact 
Report's anticipated completion and final approval of the 
plan will occur in late 1 996. The Waterfront Land Use Plan 
will create more public access, while allowing the Port to 
develop and enhance it^ existing assets. 

In July of this year, we saw the completion of Pier 45 's 
$14 million renovation at Fisherman's Wharf which created 
101,000 square feet of modern fish processing facilities. 
As of the end of the 1 994/1995 fiscal year, the Port had 




leased 80% of the fish processing space, and we expect to 
have the balance leased within the next few months. The 
Port also took unprecedented steps to help improve the 
day-to-day operations of the fishing industry including: 
reducing the price and increasing the availability of ice and 
fuel; dredging to provide better boat access to the fuel dock 
and Fish Alley; constructing support facilities for transient 
fishing and sportfishing boats; and opening a new harbor 
office at Fisherman's Wharf. 

We have seen more people coming to the waterfront for 
a number of different reasons. The cruise industry has seen 
an upswing with an increase from 32 to 50 cruise calls in 
the last two calendar years. The rejuvenation of The 
Embarcadero has attracted runners, rollerbladers and walk- 
ers from the financial district. Residents have been lured by 
more special events including the Bill Graham New Year's 
Eve party and the San Francisco Symphony's Black and 
White Ball. Next year, we hope to see even more people 
enjoy the waterfront; whether it's dining in one of our 
twenty-six restaurants or hopping on an excursion boat 
for a view of the Bay 

The Port has made tremendous progress and overcome 
adverse obstacles in order to better the waterfront for the 
maritime industries, businesses, tourists and residents, 
although there is an immense amount of improvement to 
be achieved in the coming years. Next year, we will contin- 
ue to see improvements to Fisherman's Wharf the Cruise 
terminal. Ship Repair, and the Ferry Building; the completion 
of the Pier 52 Boat Launch; and hopefully the berthing of 
the USS f\Aissouri at Pier 30/32. 

This year has in fact been a successful one, in our quest for 
furthering the betterment of the Port * 




4 PORT OF SAN FRANCISCO 1994/95 ANNUAL REPORT 



I 



The Ferry Building has been one of San 
Francisco's most revered landmarks since its 
completion in 1 898. For generations of Bay 
Area residents and visitors, it has stood as a symbol of 
the City's rich waterfront history With the removal of 
the Embarcadero Freeway a strong desire to see the 
building restored to its former grandeur has revived. 
The passage of Proposition P in the November 1 994 
election moves this closer to becoming reality 

Proposition H 

In November 1 990, San Francisco voters approved 
Proposition H, which placed a moratorium on all non- 
maritime development on piers until a comprehensive 
land use plan (the "Waterfront Plan") was prepared for 
all Port properties. Since the Ferry Building sits on a 
large pier structure, the moratorium applies to this his- 
toric building. Proposition H therefore has been one of 
the key obstacles to the Port's ability to proceed with 
the Ferry Building project. 

In early 1 994, the Port was successful in its application for 
several federal grants to fund preliminary planning and 
design for the Ferry Building renovation project. With 
the first grant from the Intermodal Surface Transporta- 
tion Efficiency Act (ISTEA), the Port began to investigate 
the feasibility of the renovation. The analysis confirmed 
that a significant funding subsidy would be needed in 
order to undertake the entire project at once. 

During this analysis, it became clear that the moratorium 
imposed by Proposition H was preventing the Port from 
generating serious interest from private investors and 
public funding agencies. Accordingly Proposition P was 





drafted for the November 1 994 ballot, to see 
exemption from the moratorium for the buildlngS 
renovation. 

Lifting the Moratorium 

Proposition P was placed on the ballot with UNANI- 
MOUS support of all eleven members of the Board 
of Supervisors, as well as the Mayor Ballot arguments 
in favor of Proposition P were submitted by the Board 
of Supervisors, the Port Commission, the Mayor, the 
Waterfront Plan Advisory Board, the Foundation for 
San Francisco's Architectural Heritage, Sar>Trancisco P 
Beautiful, and the California Historical Sodtety With this 
overAvhelming support, the measure was approved in 
the November 1 994 election by nearly 65% of ItKe vote. 
Proposition P allows the Port and the City to now 
move forward with the approvals necessary for the 
Ferry Building project. More importantly. fE)ie exempl&n 
assures both public and private interests litiat the Port' 
and City agree the Ferry Building project is a top prion- 
ty although the downsizing of available federal assistance 
will make pnpjec;t financing more difficuhjto obtain. We 
liken the Ferry building renovation to the successful 
Union Street Station in Was]| ingto7)|^ .G. and 
Street Station in Philadelphia. i ! . 



Jhe Port began _et]ivii onmon tjalrfp ft^v^^ of this pi ic t 
in Fall 1 994, "and certification is expected in l"^96.The 
Port is pursuing additional federal funding for the pro- 
ject and IS hopeful that it will be able tip cpnfirfug the 
Ferry Building Renovatioa »- — . . I , ... . 



PORT OF SAN FRANCISCO / 994/95 ANNUAL REPORT 5 



Waterfront Land Use Plan 




During this year; the Port of San Francisco 
passed a major milestone in the comprehen- 
sive public planning process to determine the 
future of the T'A miles of waterfront under the Port's 
control. On January 24th, 1 995 the Port Commission 
authorized its staff to proceed with environmental 
review of the Draft Waterfront Land Use Plan that was 
recommended by the Waterfront Plan Advisory Board, 
with some minor modifications agreed upon by the 
Port Commission (the "Draft Plan"). This accomplish- 
ment marked the culmination of a more than three 
year planning process that included over 100 public 
meetings of the full Advisory Board, in addition to 
numerous meetings of the Advisory Board's Financial 
and Implementation Subcommittees, public workshops 
and neighborhood and community meetings. 

Staff proposed specific changes to a small percentage 
of the Advisory Board's recommendations, and Public 

rr\\\C "^i^^Mi hearings on the pro- 
( ]f\\ S ^^^B posed revisions were 

held in November and 
December 1994, and 
January 1995. 
Completion of an 
Environmental Impact 
Report subsequent to this review is a precursor to 
adoption of a final Waterfront Land Use Plan. 

Throughout the planning process, the diverse citizens 
of San Francisco appeared before the Advisory Board 
and Port Commission asking for the waterfront of their 
dreams. Some called for maritime industry and com- 
merce. Others called for new recreation and vital busi-'| j 
ness activities - for places to eat and drink, run errands, 
work, rent a bike, launch a dinghy or take refuge on a 
windy and foggy summer day Still others called for 
quiet and restful places to enjoy the nature and beauty 
of the Bay Most called for all of these places. 




The goals of the Draft Plan summarize the public's con- 
sensus about what should be achieved on the water- 
front, and are reflected throughout the site specific 
land use policies and options in the over 200 page 
Draft Plan: 



» A Working Waterfront. Port lands should 
continue to be reserved to meet the current 
and future needs of cargo shipping, fishing, cruis- 
es, ship repair ferries and excursion boats, recre- 
ational boating and other water-dependent 
activities. 

* A Revitalized Port. New investment should 
stimulate the waterfront's revitalization, providing 
new jobs, revenues, public amenities and other 
benefits to the Port, the City and the State. 

* A Diversity Of Activities And People. Port 
lands should host a diverse and exciting array of 
maritime, commercial, entertainment, civic, open 
space, recreational and other waterfront activi- 
ties for San Franciscans and visitors alike to 
enjoy 

* Access Along The Waterfront. A network of 
parks, plazas, walkways, open spaces and inte- 
grated transportation improvements should 
facilitate access to, and enhance the enjoyment 
and appreciation of the Bay environment. 

* An Evolving Waterfront, Mindful Of Its Past 
And Future. Improvements should respect and 
enhance the waterfront's historic character 
while also creating new opportunities for San 
Franciscans to integrate Port activities into their 
daily lives. 

* Urban Design Worthy Of The Waterfront 
Setting. The design of new developments should 
be of exemplary quality and should highlight 
visual and physical access to and from the Bay, 
while respecting the waterfront's rich historic 
context and the character of neighboring devel- 
opment. 

* Economic Access That Reflects The Diversity 
Of San Francisco. The economic opportunities 
created by commercial uses should be made 
accessible to persons of both sexes as well as 
to a representative variety of ethnic and cultural 
backgrounds, so that those persons receiving 
these economic opportunities reflect the 
diversity of the City of San Francisco. 




6 PORT Of SAN FRANCISCO I 994/95 ANNUAL REPORT 





In light of constant nnarket 
changes occurring in mari- 
time and non-maritime 
operations, an important 
conclusion was reached 
during the planning 
process: the Waterfront 
Land Use Plan must be flexible.The Draft Plan therefore 
identifies several acceptable maritime and/or non- 
maritime land use options for a third of the Port sites 
to respond to changing market conditions, while also 
addressing the needs of existing tenants, community con- 
cerns and operational requirements. It also acknowledges 
that there are ample opportunities on Port lands to 
accommodate maritime, open space and public access, 
as well as other commercial and recreational uses. 

In recognition of the public's overwhelming desire to 
ensure a future for maritime activities along the Bay, 
the Draft Plan provides for the long-term needs of 
the Port's numerous maritime activities - cargo, ship repain 
fishing, passenger cruise, ferries, excursions, and those 
requiring a waterfront location in order to provide their 
basic functions. Based on information gathered in 1 992 
during extensive public workshops with maritime industry 
representatives, and on adjustments in 1 994 to reflect 
current maritime trends, the Draft Plan reserves approxi- 
mately two thirds of the Port's property to meet the 
existing and future land use needs of all water-dependent 
activities. It does this by reserving most Port property 
south of the China Basin Channel for these uses. It also 
s. x^^^romotes modernization of commercial fishing opera- 

ncluding new harbor facilities at Fisherman's Wharf; 
advocates restoration of the historic Ferry Building as a 
regional transportation hub by encouraging commuter 
ferry water taxi, airport shuttle and other waterborne 
transportation activities; promotes a new cruise ship ter- 
minal; provides additional sites for histQric-Ship'berthing, 
excursion boats and water taxi docks; designates the 
shoreline adjacent to Mission Bay for expanded and 
improved public boat launch and recreational boating 
facilities; and identifies a number of new locations for tran- 
sient boat docks, providing access for mariner visitors to 
San Francisco. 

The Draft Plan also identifies other activities, such as pub- 
lic access, open space and commercial uses, that can be 
accommodated on Port property Such possible land uses 




were identified in Options for Change, a report published 
for public review and the subject of numerous public 
meetings held from Fall 1 993 through Spring 1 994. Based 
on public and professional review, and comments on that 
document, new activities have been identified that will 
help revitalize and improve the waterfront. These activities 
will provide revenues to fund maritime and public access 
improvements, as well as other Port operations such as 
maintenance and environmental clean-up. 

The Draft Plan's flexibility in land use options is balanced 
by general policies and standards, ensuring that new pro- 
jects address other concerns. As a further check for 
major projects the Plan requires creation of an advisory 
group composed of community representatives to pro- 
vide input and guidance to the Port at an early stage in 
the development process. A continuing role for San 
Franciscans in shaping future waterfront improvements 
will be ensured. 

In some instances, existing regulatory constraints preclude 
the Port's ability to seek the diversity of activities called 
for in the Draft Plan. The Draft Plan therefore acknowl- 
edges that further work with state and local agencies is 
^^^^^^^^^ necessary to determine 
~|~|— j^g^^^^^Hj^l whether revisions or con- 
^^^^^^^^^^^^ tinuing amendments 

should be made to their 
land use policies to pro- 
vide consistent guidance 
from all regulatory bodies. 
The entitlement processes of these agencies must be 
coordinated to streamline the development review and 
approval process, instead of through sequential and often • 
circular project reviews which v^^te time and money 
This work will continue throughout J9^5 and into 1996. 
with periodic public hearings for receiving comments on 
any proposed amendments. 

Concurrently the EIR for the Draft Plan will be complet- 
ed by late 1 996. The Port Commission can then adopt 
the Watetfront Land Use Plan and forward: 

1 ) conforming amendments to the City's Master Plan 
and City Planning Code for review and action by 
the Planning Commission and the Board of 
Supervisors 

2) conforming amendments to BCDC's plans and 
policies, for review and action by BCDC • 




PORT OF SAN fRANCIiCO 1 994/95 ANNUf^L REPORT 7 



Waterfront Transportation Projects 



In January 1981, the San Francisco Board of 
Supervisors, Caltrans, and the Metropolitan 
Transportation Commission jointly submitted a 
request to the federal government for a substitute to 
the unconstructed portion of the waterfront freeway 
The subsequent approval by the U.S. Department of 
Transportation led to lengthy studies for the 1-280 
TCP An Environmental Impact Report (EIR) was 
prepared and certified by the City Planning Commis- 
sion in late 1985 with planning and design for the 
Waterfront Transportation Projects then begun in 
early 1986. In October 1989, while in detail design of 
the Embarcadero Roadway Project, the Loma Prieta 
Earthquake struck the Bay Area damaging the 
Embarcadero Freeway and Terminal Separator 
Structure. This necessitated its closure for reasons of 
safety In 1994, Caltrans completed demolition of the 
structure with the intent to rebuild in-kind to current 
construction standards. During demolition, the City 
began, once again, to question the need or practicality 
of such an obtrusive structure along its waterfront. 
The issue was brought to the Board of Supervisors, 
who ultimately decided that the Terminal Separator 
Structure and Embarcadero Freeway should not be 
reconstructed: Substitute projects offering the neces- 
sary transportation benefits were to be considered. 

A planning effort for the replacement projects 
including a redesign of the Open Space area at 
the foot of Market Street began in 1 990.These 
studies were incorporated into the ongoing planning, 
design and construction efforts for the roadway and tran- 
sit improvements along The Embarcadero, which were 
part of the original 1-280 TCPThe projects are managed 
by the Waterfront Transportation Projects Office, which 
reports to the Chief Administrative Officer (CAO). 

The Waterfront Transportation Projects are composed 
of nine projects along the northeastern waterfront of 
the City. These projects are referred to by title as: 

• The Embarcadero Surface Roadway Reconstruction 
Project 

• Mid-Embarcadero Roadway Project 

• Terminal Separator Replacement Project 

• Muni Metro Turnback Project 

• Muni Metro Extension Project 

• Mid-Embarcadero Open Space Project 

• F-Line Lower Market Extension Project 



• F-Embarcadero Fisherman's Wharf Loop Project 

• Traffic Systems Management (TSM) Project 
(on Bay and North Point between Van Ness & 
The Embarcadero) 

Most of the projects are located within the 
San Francisco Port Commission's jurisdiction, 
which administers the Port lands as a State 
Land Trust. The Embarcadero Surface Roadway 
Reconstruction Project involves the reconstruction of 
the roadway from North Point Street south on The 
Embarcadero to Broadway and from Folsom Street 
south onto and including King Street to the vicinity of 
6th and Berry Streets. The South Embarcadero portion 
from Folsom to King and Second Streets was completed 
in July 1 994. The design of The Embarcadero includes a 
twenty-five foot wide bayside pedestrian promenade, 
landside walkways, historical and abstract art projects, 
signalized crosswalks, and a rail transit system located in 
the center of the corridor separated by medians land- 
scaped with palm trees that can survive gale force winds 
and high salt content in the air 

The Mid-Embarcadero Roadway and Terminal Separator 
Replacement Projects will replace the Terminal Separator 
Structure and Embarcadero Freeway (SR-480) by pro- 
viding a system of freeway connections and street 
improvements which will provide motorists with accessi- 
bility comparable to the previous system. The project 
limits include The Embarcadero between Folsom Street 
and Broadway as well as the surface streets adjacent to 
the 1-80 mainline freeway The environmental document 





i jj 


i 


ilJ . 


to 




mm I 

^ 




8 PORT OF SAN FRANCISCO 1994/95 ANNUAL REPORT 



currently analyzes four build alternatives for the com- 
bined replacement project. It is anticipated that the 
Draft EIS/EIR will be published in the Spring 1996. 

With few exceptions, the Surface Roadway Replace- 
ment Project will provide The Embarcadero with four 
lanes. The project is funded by the Federal Highway 
Administration Interstate Transfer Funds, State Highway 
Funds, and local transportation sales tax funds. 

The Muni Metro Turnback Project (MMT) and 
Muni Metro Extension Projects (MMX) are 
intended to relieve the excessive delays currently 
encountered by the Muni Metro trains under Market 
Street as they approach the waterfront area at 
Embarcadero Station. The MMT Project extends the 
subway tunnel eastward and southward, bringing it to 
grade on The Embarcadero at Folsom Street. The instal- 
lation of additional underground switches and turnback 
tracks will increase operational efficiencies and the 
capacity of the Muni Metro system. The MMX Project 
continues the tracks from the subway portal of the 
MMT Project southward on The Embarcadero and onto 
King Street, to approximately 6th and Berry This exten- 
sion will add five high-level, center-loading platform 
stops, that will provide service to the Rincon Point, 
South Beach, and proposed Mission Bay communities, as 
well as the joint Powers Board Caltrain depot at Fourth 
andTownsend Streets.The MMT Project is funded by 
Federal Transportation Administration (FTA) grants, 
state rail bonds, and local sources. The MMX project is 
funded by FTA grants, state rail bonds. Bay Area Rapid 




Transit (BART) capital reserves, and local transportation 
sales tax proceeds. 

As a result of the demolition of the Embarcadero 
Freeway the potential for a new public open 
space has been created at the foot of Market 
Street. Through the Mid-Embarcadero Open Space 
Project, the City will consider the land use, implementation 
feasibility, urban design character and open space pro- 
gramming for the area bound by Mission Street. Steuart 
Street, Washington Street, and The Embarcadero. The City 
will forward a recommendation for the re-use of this area. 

The F-Line Lower Market Extension project will extend 
the historic surface rail system from Fremont and Market 
Street to The Embarcadero corridor The F-Embarcadeno 
Extension Project will then extend the rail service north 
along The Embarcadero to Jefferson Street. 

The F-Embarcadero Fisherman's Wharf Loop Project will 
extend rail service west on Jefferson Street, south on 
Jones Street, and east on Beach Street, completing a 
one-way loop through the Fisherman's Wharf area, and 
returning to The Embarcadero. Six-inch high, curbed 
waiting areas will serve as streetcar stops. The F-Line 
fleet will consist of renovated Presidential Conference 
Car (PCC) streetcars, augmented by the international 
historic fleet during peak seasons and weekends. The ser- 
vice will accommodate new ridership generated by the 
developing northeast waterfront community, and those 
seeking an alternate service to the Powell Street cable 
car line. This project is funded by state rail bonds, local 
transportation sales tax proceeds, and other local sources. 

The Traffic Systems Management (TSM) Project consists 
of a series of signage and signal improvements to 
improve the safety and accessibility for automobiles and 
pedestrians on and across Bay and North Point Streets 
between Van Ness and The Embarcadero. The TSM 
Project is funded by Interstate Transfer Funds and the 
local transportation sales tax. 

These projects will serve to improve local and regional 
transportation, including business and recreational mar- 
itime access.The completion of the South Embarcadero 
Project marks the genesis of the transportation ofThe 
Embarcadero. The final restoration is expected to be 
completed by 1 999, and will position the Port as a 
renewed destination point going into the next century • 



PORT OF SAN FRANCISCO / 994/95 ANNUAL REPORT 9 



WoRkiNG Toward Revitalizing 

The PoRT-iL 




The Waterfront Transportation Projects 
are a set of roadway and transit projects 
which will improve both local and 
regional transportation along the City's bay front 
Caltrans's original proposal for an elevated free- 
way by-pass system was to link 1-280, the Bay 
Bridge, and the Golden Gate Bridge with an 
elevated structure over The Embarcadero. 
from Mission Street through Fisherman's Wharf 
and the Marina DistriCL In the 1960s, after 
partial completion, many citizens of San 
Francisco strongly opposed the elevated free- 
way Ultimately, in the mid 60s, the Board of 
Supervisors passed a resolution asking Caltrans 
to stop all efforts associated with a waterfront 
freeway. These roadway projects resulted • 



Industry Developments 



Sailing High: 
Cruise Business At 
San Francisco Edging 
Up Significantly 

A recent cruise industry survey has determined 
that the majority of cruise passengers expect 
some day to return to the same destination 
they have cruised for a future vacation. Most cruisers 
use a passenger ship as a vehicle for sampling future 
vacation destinations.This is indeed good news for the 
City as the Port of San Francisco will experience a 38% 
increase in the number of cruise ship calls over the 
prior year San Francisco logged 47 passenger vessel 
calls in this fiscal period. 

Tied heavily to the Alaskan cruise market, most of 
these ships visiting the City involve Pacific Northwest 
ports of call. San Francisco remains an effective stop- 
ping point enroute, as the fleets head northerly from 
warmer climes in the South during the spring, only to 
be repeated again in the fall when the fleets traditional- 
ly return to their warm "winter homes." Alaska now 



Cruise Lines/bervicing 
San Francisbo 




///// 

/ / / ^ 

" /O c<i /»? /.P 
•V <C ^ 



CarnivaJ^rvise Line 

Wty Cruises 

per Cruises 

ystal Cruises 

Cunardli^yal Viking Line 

iimerica Line 

ub of Genoa 

uisen Kaisha 

an Cruise Line 

& Oriental 
:am Navigation 



Princess Cruises 

Regency Cruises 

ibbean Cruises, Ltd. 

Royal Cruise Line 

bourn Cruise Line 




ranks third among all possi- 
ble destinations frequented 
by North American pas- 
sengers, and continues to 
be a strong market, regis- 
tering 1 2% annual growth 
on average for each of the 
past ten years. As the 
interest and support for 
this market continues, 
increased congestion at 
Vancouver the base of the 
Alaskan trade, means that 
more ships plan different 
stops and lengthier more 
interesting itineraries in 
order to prevent a bottle- 
necking effect at the begin- 
ning and end of the 
Alaskan Summer season. 
San Francisco was able to 
increase its total annual 
calls by I 3 over the 
prior period given this 
migratory pattern. 




Newly built ships continue to 
moke San Francisco a premier 
Port of Call: From top to bot- 
tom - the m/v. SILVERCLOUD; 
mlv RYNDAM; m/v LEGEND of 
t/ie SEAS; mlv SYMPHONY. 



Though cruise travel con 
tinues to be one of the 
fastest growing areas of 
travel tourism, the West 
Coast has not been able to take full advantage of the 
growth. In fact, several California ports have seen a 
downturn in business, primarily because of the State's 
ban on casino-style gaming aboard vessels operating in 
international waters, but among California ports. CAPA, 
the California Association of Port Authorities, is assisting 
in seeking legislative relief at the federal level to clarify 
jurisdictions, which should pass in 1 996 and revive lost 
business experienced in the past two years. 

Also impeding expansion of Central West Coast cruise 
activity however are the requirements imposed by the 
Passenger Act of 1 886.This set of legislative standards 
requires any foreign-flagged vessel to incorporate a for- 
eign port of call in its itinerary and then return each 
passenger to the same U.S. port from which they 
embarked. Given the distances involved between the 




12 ' I OF SAN FRANCISCO 1994/95 ANNUAL REPORT 



Central Coastal ports and our foreign neighbors to the 
North and South, the time involved for such a conn- 
plete itinerary is at least ten days, and undesirable by 
the standards of most younger travellers and families. 
Still, legislative change that would relax these restrictions 
is gaining momentum among House and Senate mem- 
bers. Such a change has the potential to give rise to a 
v/hole new domestic market that has never been seen 
before in San Francisco. 

Fiscal Year 1994/95 finished as a banner year for San 
Francisco, as more interest in the longer 10-12 day 
roundtrip excursions to Alaska was registered. See the 
previous table for a listing of the 15 lines who will be 
calling at San Francisco next yean as well as the types 
of passages they will offer # 

The Port of 
San Francisco 
Goes Way Beyond 
Containers 

While many West Coast ports offer services 
to either the container or breakbulk mar- 
kets, the Port of San Francisco has the 
unique advantage of being able to serve both. The abili- 
ty to offer services to the project and breakbulk cargo 
principals paid off for the Port in 1 995. 

The Port has long been the call of choice for more 
traditional non-containerized shipments including 
newsprint and Mercedes automobiles, as well as con- 
tainerized trade from Latin America. Further adding to 
this base in 1 995, the Port was able to attract major 
project moves destined for all parts of the world. 
Starting early in the yean an Intermarine vessel called 
at the Port to load the Erickson Air Sky Crane — en 
route to Malaysia for environmental logging purposes, 
and large quantities of steel structurals bound for 
Bangkok. The Serpac group loaded over one million 
pounds of machinery and kilns transported from a 
closed-down cement plant in San Andreas, California, 
bound for a Bolivian mining site, where this machinery 
was installed into a plant used by the gold, copper and 
limestone industries. Because of the ability for the Port 



to offer staging areas and flexible free times, Norsul 
Internacional was able to book 2,000 tons of machinery 
that originated at the Toyota Tsusho America plant in 
Fremont, California. The plant was destined to a new 
production site, making it the first auto plant for Toyota 
in Brazil. It will manufacture autos for the Brazilian 
market as well as exports to Mexico and possibly the 
United States. 

Shippers found that the Port's facilities were ideal, as 
they were able to take advantage of the on-dock rail, 
secured paved land for staging and marshaling, deep 
water draft, cranes, and warehouse space found here 
at San Francisco. 

They found that the Port also understood their need 
to be cost effective, and they were able to obtain the 
flexibility in pricing and free times that were needed 
in order to remain competitive. 

The Port of San Francisco continues to refine their 
services for this market, confirmed by recent tariff filings. 
The Port's crane rate for breakbulk moves was lowered 
to an equivalent of 65% of the container crane rates, 
and extended free time and reductions in tariff rates 
were also filed for the breakbulk items. The Port intends 
to remain committed to this market, and is looking 
forward to an increase in the project and breakbulk 
tonnages to be moved in 1 996 * 




Machinery from a closed cement plant in San Andreas. California is 
loaded at Son Francisco aboard the MIS Buenaventura, bound for a 
Bolivian mining site. 



PORT OF SAN FRANCISCO 1 994/95 ANNUAL REPORT 1 3 



Industry Developments 





Bringing The 
Fish Back To 
Fisherman's Wharf 

After years of planning, design and input from the 
fishing industry, the Port of San Francisco com- 
pleted the Pier 45 Commercial Fishing Center 
at Fisherman's Wharf.The $14 million dollar renovation 
■t- project which 

opened to 
rave reviews 
last August, is 
aimed at reju- 
venating San 
Francisco's 
seafood indus- 
try - the 
industry that 
defines Fisherman's Wharf 

Pier 45 suffered extensive damage during the 1 989 
Loma Prieta earthquake, forcing many fishing companies 
to leave Fisherman's Wharf.The modernization of the 
fish processing facilities at Pier 45 signals a renaissance 
for San Francisco's fishing industry The scope of the 
project has allowed the Port to reconfigure the fish 
handling facilities and to 
better meet the opera- 
tional and sanitation 
needs of the fishing 
industry Built in the 
1 920s, the pier under- 
went a complete reno- 
vation this year that 
included new utilities, 
a seismic upgrade, and 
a new wastewater system that will help protect the 
water quality of San Francisco Bay The Commercial 
Fishing Center at Fisherman's Wharf will supply the 
highest quality seafood to local, regional and world 
markets, and be a model for modern fish processing 
facilities throughout the United States. 

The PorT has already signed eleven leases with seafood 
companies who will open processing and receiving 
operations at Pier 45. These include some with a 




4 




number of 
California's 
largest 
seafood 
companies 
who are 
moving oper- 
ations to the 
Wharf for 
the first time. 

The fishing companies to sign leases this year included 
A. LaRocca Seafood, Caito Fisheries, J&K Trading 
Company Monterey Fish, North Coast Fisheries, Sea 
Win Fish, Lusamerica Foods Inc., Polar Ice, All Shores 
Seafood, Youngs Seafood and H&N Fish Company H&N 
fish is one of the West's largest seafood producer; 
processor distributor and wholesaler They have signed 
a ten year lease for nearly 20,000 square feet of Pier 45 
for use as a major production facility When fully occu- 
pied, it's expected that companies doing business at the 
Commercial Fishing Center will provide approximately 
1 50 jobs. 

The reopening of the Pier 45 Commercial Fishing 
Center is the cornerstone of our efforts to keep the 
fish in Fisherman's Wharf. And according to John Caito, 
Chairman of the Board of Caito Fisheries, Inc, whose 
company has been operating in San Francisco since 
I 885, "It's been decades since we've had an operation 
at Fisherman's Wharf, so it's a dream come true to be 
moving back." 

The repair renovation and seismic upgrade of the I 1 .2 
acre complex was largely financed by economic devel- 
opment and disaster assistance grants from federal 
and state agencies. Reimbursement for the costs of 
earthquake repairs was obtained from the Federal 
Emergency Management and Assistance Agency 
(FEMA) and the California Office of Emergency 
Services. Other substantial grants were received from 
the State of California Trade and Commerce Agency 
and the U.S. Department of Commerce Development 
Administration. The U.S. Department of Commerce 
recently selected the Pier 45 Project as the most out- 
standing public works project for the Western Region ♦ 



I 



14 PORT OF SAN FRANCISCO 1994/95 ANNUAL REPORT 



San Francisco 
Ship Repair 

In retrospect, ardent strides nnay be the term that 
connes to define San Francisco's ship repair industry 
this year After recognizing the magnitude of job 
losses facing this industry locally due to base closures 
and defense spending cutbacks, the Port sized up the 
barriers that local repair companies would face in their 
transition toward capturing a larger commercial client 

base. Working 
closely with our 
two ship repair 
tenants, a plan 
was crafted to 
successfully 
maneuver 
through these 
new commer- 
cial realities. 
Over the past 
five years, the 
yards' manage- 
ments have 
worked in con- 
cert with labor 
to craft bar- 




Son Francisco has t/ie only commercial ship 
repair facilities between Portland and 
Southern California: 45 acres of land are 
dedicated to ship repair and divided between 
two repair yards, San Francisco Drydock 
(SFD) and Service Engineering Company 
(SECO). 



gaming agree- 
ments that have 
been successful in preventing cost increases, and keep- 
ing the local yards globally competitive. 

Moving away from a traditional fixed rent basis, the 
City's Board of Supervisors approved the Port amend- 
ing its thirty year lease with San Francisco Drydock 
Company for 49 acres of land, waten and buildings at 
Pier 70. By design, the amendment only affects the origi- 
nal lease terms for the years 1 994 through 1 997; the 
key transition period during which local repair yards 
hope to establish a market presence that will see their 
declines in defense-based revenues offset by larger 
amounts of commercial work. Working as a partner the 
Port's amendment provides for a new percentage rent 
structure that sets monthly payments based on 3% of 
gross receipts attained by the ship yard, with a guaran- 
tee to the Port of $ I million per year In exchange, the 




total area for tenant occupancy was reduced 34%, from 
49 acres to 32.3 acres. A potential revenue offset is 
anticipated by the Port, as the newly freed-up lands are 
again available 

for re-leasing, ! * 

either by Port 
staff or 
through the 
tenant's 
efforts. 

Big gains in 
locating alter- 
native invest- 
ment sources 
were also 
made by the 
Port as its 
application 
for $2 million 

worth of repairs to the six cranes supporting the two 
Port-owned drydocks at Pier 70 was approved in March 
1 995. $ 1 .5 million in funds from the United States 
Economic Development Administration and $250,000 
from the State of California, when combined with the 
Port's own $250,000 contribution, will provide the funds 
necessary to fully renovate all six cranes, and protect the 
asset value of nearly $20 million that the Port has 
invested in the drydocks * 



San Francisco's yards together will generate 
more thon $5 1 million in sales by year-end 
1995, will provide $1.5 million in direct rev- 
enues to the Port, and employ 700 workers. 



I 

I 



Son Francisco's approved economic development project 
will create approximately 58 new jobs, and will yield a 
more modern facility, capable of handling t/je largest pas- 
senger ships on the water, and all but 1 3 ocean going 
tankers in the West Coast trade. 



PORT OF SAN FRANCISCO 1994/95 ANNUAL REPORT IS 



BALANCE SHEET 



As of June 30. 1995 and 1994 (m thousands) 



Assets 

Current Assets: 

Cash and investments, 
held in City Treasury - 
Port operatjng fund 
Receivables - net 
Matenals and supplies 
Prepaid insurance and 
other assets 

Total Current Assets 

Restricted Assets: 

Cash-Contract retention 

deposits 
Cash held in City Treasury - 

Lessee deposits 

Capital outlay 
Cash held by Trustee - 

Bond interest and 

redemption 
Investments - Lessee deposits 

held in trust 

Total Restricted Assets 

Property, Plant, and 
Equipment - Net 
Other Assets 

Total Assets 



/995 



1994 



! 21.135 
16.844 
1.174 

231 

39.384 



748 

1.199 
6.090 



9.105 
896 
18,038 



195.797 
740 



; 19.068 
16.152 
1.403 

319 

36.942 



940 
7.855 



5.981 
1.169 
15.945 



191.880 
430 



$253,959 $ 245,197 



Liabilities and Equity 

Current Liabilites Payable 
from Current Assets: 
Accounts payable and 

accrued liabilities 
Current maturities of 

long-term debt 
Accrued bond interest 
payable 

Total Current Liabilities 

Current Liabilities Payable 
from Restricted Assets: 

Current maturities of 

long-term debt 
Accrued bond interest 

payable 
Lessee deposits 
Contract retention payable 
Deferred grants 

Total Payable from 
Restricted Assets 

Deferred Revenue 
Long-Term Debt - 

Net of current maturities 

Total Liabilities 

Equity: 

Contributed capital 
Revaluation of property 
Retained earnings 

Total Equity 

Total Liabilities 
and Equity 



1994 



/99S 



16.845 
1.870 
95 
18.810 



$ 15.374 
2.245 
115 
17.734 



2.225 

1.501 
2.095 
748 
367 



6.936 

518 
60,215 
86.479 



250 
2.109 

909 



3,268 

277 
64. 1 95 
85.474 



26.700 21.944 
56.063 56.063 
84.717 81.716 



167.480 159.723 



J 253,959 $ 245,197 



The full financial statements and independent 
auditors' report may be obtained for $2.50 
($1.80 duplication and $.70 postage) 
by wnting to the Financial Manager: 
Port of San Francisco, Suite 3 1 00, Ferry Building 
San Francisco. California 941 II. 



16 PORT OF SAN FRANCISCO I 994/95 ANNUAL REPORT 



STATEMENT OF OPERATIONS 

Years Ended June 30, I 995 and I 994 (in thousands) 



1 995 1994 

Operating Revenues: 

Cargo Services: 

Maritime $ 3,449 $ 5.692 

Rental 1,167 1,032 
Tenant Services: 

Maritime 646 709 

Rental 24.722 21.709 

Power 699 740 

Other 1.529 2,549 



Total Operating Revenues 




32,212 


32,431 


Operating Expenses: 








Operations and maintenance 


21,779 




23.759 


Depreciation 


4,783 




4,544 


Fire boat operations 


1,101 




1.215 


Commercial power 


559 




616 


Total Operating Expenses 




28,222 


30,134 




Operating Income 




3,990 


2,297 


Other Income (Expense): 








Interest income 


1.731 




1.673 


Interest expense 


(3.261) 




( 4.419) 


Earthquake damages and expenses 


( 7.946) 




(5.031) 


Federal and state earthquake assistance 


7,946 




5.031 


Gain on sale of materials 


16 






Other 


525 






Total Other Income (Expense) 




( 989) 


( 2.746) 


Net Income (Loss) 




$ 3,001 


(% 449) 



PORT OF SAN FRANCISCO I 99^195 ANNUAL REPORT I 7 



INCOME STATEMENT ANALYSIS 



The Port of San Francisco recorded 
Net Income of$ 3,001,000 on 
Operating Revenues of $32.2 million 
primarily due to a decrease of nearly 
$2 million in operating expenses, 
and a significant decrease in 
the Port's interest expense realized 
through its Revenue Refunding Bonds 
issued in June of 1 994. Meanwhile, 
aggressive efforts by Port staff led to 
t/ie identification of other industries 
and facility uses, and yielded 
new business. 



Operating Revenues 

Operating revenues decreased slightly by 0.7% to 
$ 32,21 2,000. Cargo Services Income accounted for 
1 4.3% of total revenues, down from the previous year 
Meanwhile, income from Tenant Services reported an increase 
of nearly $3 million, accounting for $ 26,067,000 
or 80.9% of total revenues. 

Cargo Services' maritime revenues were down due to a decline 
in containerized liner traffic. Tenant Services income, which is a 
combination of property rentals and maritime revenues from 
the passenger cruise, ship repair, excursion, ferry recreational 
boating, and harbor service industhes, showed an increase of 
nearly $3 million. Of this, commercial property rentals were up 
1 3.9% due to aggressive leasing programs approved by the 
Port Commission: I 73 new leases were entered into during this 
fiscal period as compared to 70 in the prior period. Power sold 
by the Port was down 5.5% from the prior year The Other 
Revenues category registered a decline of 40% compared to 
the prior period, which had included several one time payments. 




operating Expenses 

Operating expenses decreased 6.3% to $ 28,222,000. 
Though Operations & Maintenance continued to comprise 
the expense majority, nearly $2 million in savings were 
realized compared to the prior year Other areas 
registering expense reductions were fire boat operations 
and commercial power, each of which averaged a 9% 
decline against Fiscal Year 93/94. The sole expense 
category to register an increase was depreciation, 
which was up 5.3% to a level of $4.8 million. 

Other Income (Expense) 

The net decrease of 64% in Other Income (Expense) 
was primarily the result of a combined increase in 
interest income, and a $1 .2 million decrease in 
interest expense. On June 28, 1 994, the Port issued 
$ 53,6 1 0,000 in Revenue Refunding Bonds with an 
average interest rate of 5.8% to advance refund 
$ 49,975,000 of outstanding Revenue Bonds with an 
average interest rate of 8.4%. Also, a one time fee of 
$ 525,000 was received in 1 995 from a permanent 
easement on Port property # 




OPERATING REVENUES 



COMMERCIAL POWER ■ 2 OX 




FIREBOAT OPEMVONS -4.1% COMMERCIAL P OWER - 2 OX 




OPERATING EXPENSES 




PORT OF SAN FRANCISCO 1994195 ANNUAL REPORT 19 



Port of 
San Francisco 

Annual Report 1995/96 




' »! * II V • 4 I 



Tke San Francisco Port Commission 



The Port of San Francisco is governed ; 
each of whom is appointed by the Mayor, sui 
Supervisors. Each member is appointed for : 
missioners completed their terms: Frank O'N 
Anne Halsted, who contributed 11 years oiW 
the Port and the people of San Francisco our 



lard of Com m 

■n by the City ^ i ■ . ■ 

' 1095-1996, fwocom- 



■ four- year. 
Ii.ilf of 



Port ot 




San F 



rancisco 



Annual Report 1995/96 




1 ilitt 




*1' 




I f^tti'i il I I ■ ^ 



icsideiM) 



Coiiteut^ 



Port J 

Financial Review 4 

A Year in Revi»vr' 6 

The W^tertvWrt 10 

II' .11. 

A Lobk to the Future 12 

Balance Sheet 15 
C iiinmissionci i >i n 

Statement of IrKome 16 



io iio4 

d9\£99I iioqaJJ lauanA 



i i i 1 

« ti i i^jD 



3 . w9»V9--i . 

or r^i^j Jnoihejbv , -J' 

9306168 

3r cfrto- - ' 



Tke San Francisco Port Commission 



The Port of San Francisco is governed by a five member Board of Commissioners, 
each of whom is appointed by the Mayor, subject to confirmation by the City's Board of 
Supervisors. Each member is appointed for a four-year term. In 1995-1996, two com- 
missioners completed their terms: Frank O'Neill, who served one four-year term, and 
Anne Halsted, who contributed 11 years of dedicated service. On behalf of the City, 
the Port and the people of San Francisco our most sincere thanks go out to them. 




Commissioner Michael Hardeman (President) 

Mr. Hardeman is the Business Manager and Mnancial 
Secretary of Local 510 — Sign Display and Allied Crafts. 

Commissioner Frankie Lee (Vice President) 

Mr. Lee is a professional engineer and C^hicf Ijcccutive 

Officer of SOH & Associates, an engineering firm. 

Commissioner Preston Cook 

Mr. Cook is a principal at I Rl Realtors, specializing in 
commercial real estate. 

Commissioner James Herman 
Mr. Herman is the Prcsidciii l.mcritus ot the 
International Longshorcmcns ami Warehousemen's 
Union (ILWU). 

Commissioner Denise McCarthy 

Ms. McCarthy is the Executive Hirector of the Telegraph 
Hill Neighborhood (^Miter. 



1 



Executive Director s Report 



o 




ver the last year we've made 
tremendous progress in our 
continuing effort to make the 
Port of San Francisco a self-supporting 
entity that the citizens of San Francisco can 
be proud of We've done so by capitalizing 
on the Port's unique balance of maritime 
commerce and commercial, recreational 
and public access activities. The Port hosts 
12 different industries that co-exist — and 
thrive. For the second consecutive year we 
have posted a positive net income, ending 
1996 with earnings of $4 million, up 
$1 million over last year. We were able to 
accomplish this by increasing both productivity — operating revenue per position is 
the highest in the documented history of the Port at $156,000 — and efficiency. At 
the sam^ time we continue to subsidize our maritime industries. 

Building our cargo shipping business has always been a priority and our aggres- 
sive marketing program, highlighting our first-rate facilities and services, is now 
producing results. This fall, after the end of our fiscal year, we signed four new 
shipping lines — the Serpac consortium (Grancolombiana, Chilean Line and Colum- 
bus Line) and Madrigal- Wan Hai lines — that will soon call Pier 96 home. These new 
tenants are the first dividends of our new cargo marketing strategy which focuses on 
niall-to-medium container shipping lines, project cargo, and breakbulk and niche 
es. I'm confident that our marketing efforts will attract matiy more cargo lines to 
fiXc out of San Francisco in the near future. 
Our other maritime industries, cruise lines, ship repair, fishing, excursions and 
ferries each have seen solid increases over the past three years. In 1995/96 we had 44 
ocean-going and 12 inland cruise calls. These vessels brought 60,000 people through 
lif Pier 35 Cruise Terminal, a facility that is currently undergoing a $2 million upgrade. 
Port lost one ship repair company, but San Francisco Drydock increased the 
Ber of cruise ships which it repaired and/or serviced. The Pier 45 fish processing 
center is now completely leased and has helped revitalize the fishing industry while 
ncreasing revenue by 50% over the 1993/94 fiscal year. Demand for the center, one 
I )f the finest in the United States, may warrant an expansion for this revitalized Port 
industry. Both excursion and ferry businesses have increased and we hope to see 
idditional gains in these industries after the Downtown Ferry Terminal Expansion 
[iroject is completed in 2000. 

Commercial operations, which account for 64.3% of our operating revenue, have 
also increased at the Port . We signed 120 new or renegotiated leases for this fiscal 
jyear, adding up to more than 400 leases over the last three years in the maritime. 
Industrial, commercial and retail industries. Our film revenue jumped 250% as nine 
jor motion pictures, as well as numerous television shows and commercials, were 
on Port locations. The waterfront also became more of a public destination, 
a million local and regional visitors came to the area for special events such as 
'b Caen Day and Fleet Week. 



These commercial operations have efficiently used 
existing assets to increase revenue, enabling us to con- 
tinue to subsidize maritime operations, improve facilities 
and fund our capital improvement projects. This year w^e 
made extensive progress in several of our capital improve- 
ment projects including the Pier 52 Boat Ramp, Fisher- 
man's Wharf Lighting, the Cruise Terminal, the Hyde Street 
Harbor, and the Ferry Terminal Expansion and Renovation. 

The Waterfront Land Use Plan (detailed on page 
10) is in the last stages of the approval process, and the 
Environmental Impact Report is expected to be certified 
in December. After adoption, the Port Commission can 
lift the non-maritime development moratorium to 
attract new businesses. The Commission, however, is not 
expected to adopt the Plan until we have concluded our 
negotiations with the Bay Conservation Development 
Commission, City Planning and State Lands Commis- 
sion. In some cases, the complex negotiations will amend 
decades-old policies to conform with current Port status 
and expidite administrative approval procedures. Once 
the moratorium is lifted, however, we hope to see 
additional projects that will continue to attract people 
to the waterfront by carefully combining commercial, 
recreational, maritime, entertainment and public-access 



activities. Public access will be a critical element of each 
new project, including new parks, fishing areas and the 
Port Walk which will span 7.5 miles. The Plan's comple- 
tion will also ready the Port for any decisions made by 
the City regarding the management of Treasure Island. 

When I became the Executive Director in 1994, 
I had many goals: to return the Port to profitability, to 
complete the Waterfront Land Use Plan, to re-focus our 
cargo strategy and to bring the public to the waterfront. 
Three years later I'm happy to report that with the 
extraordinary dedication of Port staff, we will have 
realized our goals by the end of 1996. The critical 
building blocks are in place and the Port, one of the 
City's most valuable assets, is poised for greatness. It is 
with great sadness that I will not be serving as Executive 
Director as the Port continues its successes. I'm confi- 
dent, however, that the Port will continue to improve. 
I will always cherish my years at the Port, the staff who 
helped make them so enjoyable, and the achievements 
during my tenure. 




Financial Review 



The Port of San Francisco is an enterprise fund of the City and County of 
San Francisco. Port revenue is derived from 12 separate business Hnes 
including property rental and cargo shipping operations. The comparative 
balance sheet as of June 30, 1996 and 1995 and the related income statement for the 
/ years then ended are presented on pages 15 and 16. 

Net Income 

^ For the first time since fiscal year 1989/90, the Port of San Francisco posted 
positive net income in consecutive years as set forth in Table A. 

The sustained growth in net income reflects the continued impact of the Port's 
1994 change in strategy which included (i) a major reorganization that streamlined 
internal procedures, increased staff responsibility and reduced expenses, (ii) a reduc- 
tion of variable operating costs, (iii) a reduction in long-term debt repayment, (iv) a 
renegotiation of numerous leases and (v) the implementation of a retooled and 
■^-rnatured maritime business plan. In fiscal year 1995/96 net income increased by 
$1,004 million or 33%, to $4,005 million. Net income equaled 12.5% of operating 
enue up from 9.3% from fiscal year 1994/95. 

peratin^ Revenue 

Fiscal year 1995/96 operating revenue decreased by less than 1% to $32,057 
million from $32,212 million. Following the departure of Evergreen Marine Corpora- 
tion, cargo revenue declined by 51% which was largely offset by growth in the 
c^mercial & industrial (up 5%) and fishing (up 35%) sectors. Revenue from other 
businesses, i.e., ship repair, harbor services, cruise, parking, and power, remained 
relatively unchanged as a percentage of total operating revenue. 




^1 Rent 64.3% 

■I Parking 11.1% 
Bi Cargo 6.2% 

^1 Ship Repair 4.9% 

■ Fishing 3.1% 
IIP' Miscellaneous 2.8%* 

Power 2-3% 
H Harbor Services 2.0% 
H Cruise 1.8% 

other Marine 1.5% 



* Includes Filming and Special Events 



Operating Expense 



Operating expense for the year ended June 30, 1996 declined by 5% to a seven 
year low of $26,745 million. The decline was due to decreases in insurance expense, 
judgement and claims expense, bad debt expense, indirect cost reimbursement to the 
City and County of San Francisco, services of other City departments and increases in 
capitalized labor. Increases occurred in the areas of facilities maintenance, deprecia- 
tion, mandatory fringe benefits, promotion expense and other fixed charges. 



Otker Income (Expense) 

Other Income (Expense) is typically comprised of 
interest income, interest expense, earthquake damage 
expense, federal/state earthquake assistance and gain on 
sale of materials. Net Other Expense rose by 32% in 
fiscal year 1995/96 to ($1,307) million as compared to 
($0,989) million in fiscal year 1994/95. In fiscal year 
1994/95 Net Other Expense included a one time fee of 
$0,525 million received on behalf of a permanent 
easement on Port property. 

Lon^-Term Dett 

At June 30, 1996, the Port's outstanding long-term 
debt obligations consisted of two series of State of 



California General Obligation Bonds, one series of Port 
Revenue Bonds and two series of City and Count)' of 
San Francisco Harbor Improvement General Obligation 
Bonds (see Table B). 

The Port's outstanding indebtedness decreased by 
$4,435 million, or 7%, to $59,250 million in fiscal year 
1995/96. The State GO Bonds (which will be fully 
retired in October 1998) have a lien on Net Revenue 
that is senior to the Revenue Bonds. 

Net revenue pledged to the Revenue Bonds is 
required to be maintained at 1.30 times debt service. 
Fiscal year 1995/96 bond coverage rose by 17% to 
2.17 times from 1.85 times in fiscal year 1994/95. 



Takle A 

(In thousands) 



Years Ended June 30, 


1996 


1995 


1994 


1993 


1992 


1991 


1990 


1989 


Operating Revenue 


$32,057 


$32,212 


$32,431 


$32,086 


$33,982 


$33,124 


$29,610 


$30,532 


Operating Expense 


26,745 


28,222 


30,134 


31,240 


29,771 


31,351 


27,811 


25,371 


Operating Income 


5,312 


3,990 


2,297 


846 


4,211 


1,773 


1,799 


5,161 


Other Expense 


(1,307) 


(989) 


(2,746) 


(1,966) 


(2,236) 


(5,263) 


(1,758) 


(2,166) 


Net Income (Loss) 


$4,005 


$3,001 


($449) 


($1,120) 


$1,975 


($3,490) 


$41 


$2,995 



TaLle B 
Long-Term Debt 



FY96 Balance FY95 Balance 



Coupon 



Final Maturity 



State GO Bonds 

Series G 
Series H 

Revenue Bonds* 
CCSF GO Bonds 

Series A 
Series B 



$375,000 
$855,000 
$48,820,000 

$5,600,000 
$3,600,000 



$760,000 
$1,140,000 
$51,385,000 

$6,400,000 
$4,000,000 



3.50% 
4.00-4.85% 
4.40-9.00% 

4.50-5.25% 
6.30% 



February 1, 1997 
October 1, 1998 
July 1. 2009 

May 1. 2003 
June 1. 2005 



TOTAL: $59,250,000 $63,685,000 

*July 1 payments are assumed to be made as of prior June 30th. 



The preceding discussion should be read in conjunction with the Port's fall financial statements and indfprndfni auditort trport. 
Copies may be obtained for $2.50 fi'om the Financial Manager, Port of San Francisco. Suite 3 1(H). Ferry Huildtng. S,in Fntnrisco. (Ailifi>mia 94111. 




Year in Review 



iCar^o Skipping 





ager to maintain its pivotal and historic role in the maritime trade, this year 
the Port developed a new cargo shipping marketing plan that emphasizes its 
operational and commercial advantages. The Port offers a variety of features 
appeal to cargo shipping lines: modern facilities, deep water, acres of unob- 
ucted lay-down space, hundreds of thousands of square feet of covered storage, lack 
fof congestion and lower costs. 

The new plan focuses on "niche" markets that include break-bulk, project cargo, 
automobiles and medium sized container carriers. As the Port continues to serve as 
* the Northern California distribution point for Mercedes Benz automobile imports 
and a major import location for rolled newsprint from British Columbia, we are also 
actively promoting our container facilities. This new focus has resulted in the 
addition of four new shipping lines, including the Serpac Consortium (Chilean Line, 
y Columbus Line and Grancolumbiana) and Madrigal-Wan Hai Lines. The Port has 
re^ntly been the gateway through which a huge cement plant was shipped to South 
America, large quantities of structural steel were sent to Bangkok, and tons of Toyota 
manufacturing machinery were shipped to Brazil. 



Commercial Fiskin^ 



San Francisco is once again the center of Northern California's commercial 
fishing industry. In August of 1995, Pier 45 in Fisherman's Wharf officially reopened 
after a $14 million dollar renovation made necessary after the 75 year old pier 
sustained damage in the 1989 Loma Prieta earthquake. The pier at the foot of Taylor 
'. ^Street in the heart of Fisherman's Wharf underwent a complete renovation that 
itjcluded new utilities, a seismic upgrade and a new wastewater system that has helped 
protect the water quality of the San Francisco Bay. 

As a result of the Port's commitment to this facility, the complex is completely 





leased with fishing tenants representing some of 
California's largest seafood companies, many of whom 
moved to Fisherman's Wharf for the first time. The 
leading varieties of sea food landed by the Wharf's 
commercial fishing fleet includes Dungeness crab, 
salmon, cod, sole and Pacific herring. According to the 
California Department of Fish and Game, commercial 
fish landings at the 
Fisherman's Wharf have 
grown from 7.4 million 
pounds in 1994 to 10.9 
million pounds in 1995. 

Following completion 
of the renovation, the U.S. 
Department of Commerce 
selected the Pier 45 Project 
as the most outstanding 
public works project in the 
Western Region for 1996. 
It was also honored with 
the 1996 Honor Award by 
the Prestigious Waterfront 
Center organization in 
Washington D.C. 



Revenue derived by the Port from the fishing industry 
for fiscal year 1995/96 was $1,002,000, a 50% increase 
over the earnings of 1993/94. 

Cruise Skipping 

It's estimated that San Francisco's passenger cruise 
industry has a $15.8 million impact on the local 
economy through the direct purchases of goods and 
services. The biggest single purchase of ship supplies was 
for $1 million made by the Carnival Inspiration. The 
City continues its long-held reputation among passen- 
gers and vessel operators as one of the most beautiful 
ocean accessible cities in the world. Five luxun,' cruise 
ships made their maiden call to San Francisco in fiscal 
year 1995/96, including Celebrity Cruise's Horizon, P&O 
Cruise's Oriana, Carnival's Inspiration, Clipper Cruise's 
Yorktown Clipper, and Nina S.P.A.'s Italia Prima. This 
year we also saw a new product line, Seabourne's 
"Cruise to Nowhere," with a San Francisco theme 
including a performance by the San Francisco Symphony. 

Nearly 60,000 passengers passed through the cruise 
terminal at Pier 35 and over 80,000 are expected in 
1996/97. Gains are projected next year due to an 
industry-wide surge in cruises to Alaska. Both Carnival 
and Celebrity cruise lines offered Alaskan itineraries 
from San Francisco in 1996 and are expected to increase 
the number of trips next year. 




7 



Cruising America... Creates Jots 

As a premiere tourism destination, San Francisco can become a hub for Califor- 
nia Coastal cruises. New types of cruises that can be offered include a four day cruise 
to Big Sur featuring Monterey, a five day cruise up California's North Coast to the 
Pacific Northwest, and voyages to Hawaii. These new calls will triple San Francisco's 
cruise business, generating $37 million in revenue for San Francisco's tourism and 
maritime industries. 

Standing in the way of this new business is a 109 year old Federal law, commonly 
known as the Passenger Services Act, which penalizes foreign flag vessels from 
trai|s|K5rting passengers between U.S. ports. The law has closed off U.S. Coastal 
^uising aboard ocean going vessels due to the decline in the size of the U.S. Fleet to 
Ipie vessel in Hawaii. 

To spearhead the lobbying effort to ammend the Passenger Services Act, the 
Cruising America Coalition was established with the active participation from the Port 
of San Francisco. The Coalition has obtained support from national tourism associa- 
tions, including travel agents' groups and other businesses dependent on the cruise 
business. Locally, the San Francisco Convention and Visitors Bureau, the S.F. Hotel 
Council, the S.F. Chamber of Commerce, Port tenants (San Francisco Drydock, 
Metropolitan Stevedoring, Pier 39 and the Waterfront Restaurant) and shipping 
'agents serving cruise lines calling in San Francisco are supporting the Port's efforts. 

On April 23, 1996, the San Francisco Port Commission formally supported the 
Coalitions' efforts. Port Commissioner James Herman commented, "Unlike the Jones 
Act, the Passenger Services Act is broken and we must fix it. This century old law is 
inhibiting jobs in maritime and tourism industries instead of creating them." The 
Cruising America Coalition does not support changes to the Jones Act, the Cabotage 




8 




law pertaining to the cargo industry which is distinct 
from the Passenger Services Act. The CoaUtion seeks to 
open up domestic itineraries to foreign flag vessels with 
protections for existing and foture American vessel 
operators in the domestic trade. 

Filming 

Film location shooting, set building and staging 
increased 250% over 1994/95, thanks to proactive 
marketing efforts. The Port served as the location for 
more than nine feature films, among them The Rock, 
Metro, and The Fan. Several television shows including 
Nash Bridges, Party of Five, and America's Most Wanted 
and major commercials for Coke, Lexus, and AT&T 
were also lensed along the waterfront. Filming in this 
area brings an income boost from cast and crew spend- 
ing, and increased visibility for the Port and its tenants. 

Leasing 

Revenue from commercial properties comprises 
64.3% — or $23.2 million — of the Ports operating 
income. During the 1995/96 fiscal year, the Port 



consummated 120 leases for new or re-negotiated 
tenancies, bringing the total number of leases from 507 
to 611. The current occupancy rates for the 4.58 million 
square feet of marketable rental space on Port property 
are at or near capacity: 100% for retail space, 99% for 
offices and 92% for industrial properties. 

Retail, restaurant and Pier 39 sales are also up 9.6%. 
The 1994/95 fiscal year gross sales of S171 .1 million have 
risen to $188.2 million in 1995/96. This number reflects 
the gross sales at 26 Port restaurants and all retail shops. 

Skip Repair 

San Francisco's ship repair industry continued to 
transition from a primarily military to a commercial 
clientele due to military base closures and defense 
spending cutbacks. San Francisco, which hosts the only 
commercial ship repair facilities between Portland and 
Southern California, saw mixed results in the 1995/96 
fiscal year as one of San Francisco's two repair firms went 
out of business near the end of the fiscal year. San Fran- 
cisco Drydock, the Port's remaining ship repair facility, 
however, had a dramatic increase in commercial repairs 
at their facilit)'. This was largely due to a surge in tanker 
maintenance and repairs, as well as a continued growth 
in scheduled servicing of cruise ships. The dry dock 
operations also employ a large number of blue-collar 
workers, employing up to 1,100 employees in peak season. 

Special Events 

More than 20 events took place at the Port last vcar, 
bringing over one million residcius and visitors to the 
area. Among the festivities were the annual C^hroniclc 
Fourth of July Celebration, Fleet Week, the Port of San 
Francisco Whale Boat Races, Bill Craham New Year's 
Eve Party, KFOG Sky Concert, and the C^iy. Lesbian. 
Bi-Sexual and Tran.sgcnder C'elebration. C)iic ot tiie 
biggest events, however, was the spcci.il I leib ( "acn 
Celebration this summer. This well attended street party 
honored the local legend, columnist and ma.stcr of "three 
dot journalism, " as well as served as the christening 
ceremony for Herb C'aen Way..., the recently renamed 
Embarcadero walkway. 



9 



Tke Waterfront Pi 



an 




In 1990, San Francisco voters approved Proposition H, an initiative that required 
the preparation of a land use plan for the Port's piers and properties. In the four 
years that followed, an advisory board made up of San Francisco residents. Port 
Ifienants, architects, urban planners, and maritime, labor and neighborhood representa- 
joined forces to draft the Waterfront Land Use Plan. Incorporating input from 
re than a hundred public meetings, the plan documents the needs, concerns, 
environmental considerations and financial conditions that have an impact on the 
en and a half miles of publicly owned Port lands. 
The plan, the first such effort to be completed in over twenty years, considers 
both business and recreational uses for the picturesque waterfront property under the 
Port's jurisdiction. The document calls for a balanced range of uses to meet the Port's 
nancial needs. Reserving most waterfront properties for the expansion of maritime 
fKrations, the plan also encourages the creation of new public access, recreational 
d open space along the Bay. At the same time compatible new commercial 
development is also encouraged. Income-generating tenants can help subsidize 
maritime industries, preserve Port property, and fond new public developments. 
With the implementation of this balanced plan, the Port will be able to enter the 
St century as an economically viable public agency, and one that can make fiill 
d fitting use of our spectacular waterfront. 

Goals Of Tke Pi an 

A Working Waterfront 

Port lands should continue to be reserved to meet the current and future needs of 
cargo shipping, fishing, passenger cruise ships, ship repair, ferry and excursion 
boats, recreational boating, and other water-dependent activities. 

A Revitalized Port 

ew investment should stimulate the revitalization of the waterfront, providing 
Aew jobs, revenues, public amenities and other benefits to the Port, City and State. 





— pr 








1 







10 



A Diversity of Activities and People 

Port lands should host a diverse and exciting array of 
maritime, commercial, entertainment, civic, open 
space, recreation and other waterfront activities for 
all San Franciscans and visitors to enjoy. 

Putlic Access Along tke ^^(^terfront 

A network of parks, plazas, walkways, open spaces 
and integrated transportation improvements should 
improve access to, and enhance the enjoyment and 
appreciation of the Bay environment. 

An Evolving ^iX^terfront, Mindful of 
Its Past and Future 

Improvements should respect and enhance the 
waterfront's historic character while creating new 
opportunities for San Franciscans to integrate Port 
activities into their daily lives. 

Urtan Design Wortky of tke 
Waterfront Setting 
The design of new developments should be of 
exemplary quality and highlight visual and physical 
access to and from the Bay. At the same time it 
should respect the waterfront's rich historic context 
and the character of neighboring development. 



Economic Access tkat Reflects tke 
Diversity of San Francisco 

The economic opportunities created by commercial 
uses should be made accessible to persons of both 
sexes and to a representative variety of ethnic and 
cultural backgrounds — to people who reflect the 
diversity of the City of San Francisco. 



Water(ront Pla 11 btatus 

The Port is in its final phase of work 
on the Waterfront Lind U.sc Plan. This 
plan describes acceptable uses of Port 
facilities. It will also set forth policies, 
contained in the Urban Design and Public 
Access Plan. These policies will increase 
waterfront views, open space and public 
access, and preserve historic resources as 
part of new development projects. 



11 




A Look to tke Future 



As the Port moves toward the year 2000, several exciting projects on 
San Francisco's waterfront are coming closer to fruition. Once completed, 
these projects will enhance the Port's reputation as one of America's dynamic 
and diverse urban ports. 

^X^terfront Transportation Projects 

San Francisco's Waterfront Transportation Projects include roadway improve- 
historic streetcar line, a light rail line, pedestrian walkways and lighting, 
buth Embarcadero was completed in 1994, the North Embarcadero was 
mplered in 1996 and the Fisherman's Wharf F-line Loop will be completed in 
1998. The Environmental Impact Report Statement and project approvals for the 
Mid-Embarcadero Roadway segment will be completed in early 1997 and construc- 
tion will end in the year 2000. 

Ferry Building Renovation Project 

N The Ferry Building, one of San Francisco's most endearing landmarks, has stood 
watch over the City's waterfront for nearly 100 years. The Port, with offices in the 
Ferry Building, is making progress towards the renovation of this historic building 
that still serves the entire Bay Area with six commuter ferry routes, transporting 
passengers from Tiburon, Sausalito, Larkspur, Alameda, Vallejo and Oakland. The 
renovation is seen by Port and City officials as an opportunity to build upon the 
r^vH^ilization of the waterfront and the public transportation and pedestrian improve- 
ments of the Waterfront Transportation Projects. 

The Ferry Building's civic importance has led to a development program that is 
befitting a national historic landmark. Current plans call for a mix of uses, focusing 
on regional transit services and public oriented food-related uses on the ground floor 
and a mix of conference, office and entertainment uses in the upper levels. The Port 
is currently considering alternative development plans and funding sources and will be 
^ soliciting developers in the spring of 1997. 



12 



Pier 52 Boat Ramp 

The Pier 52 Boat Ramp project entails the creation 
of the only public boat ramp in San Francisco. A new 
boat ramp will be built with an accessible dock for hand 
launched craft, a 20-space vehicle/trailer parking lot, a 
small support structure to house a cafe and required sup- 
port facilities. A bait and tackle shop, public restrooms 
and indoor and outdoor eating areas are also planned. 
Completion is due in summer of 1997. 

Hyde Street Harkor 

Commercial fishing has been the foundation for 
Fisherman's Wharf With the new Pier 45 fish processing 
center, the wharf has become a national example of a 
first rate commercial fishing facility. The Hyde Street 
Harbor is critical to the Port's efforts to continue to 
revitalize the fishing industry. 

As part of a series of improvements in the 
Fisherman's Wharf area, the Port intends to build a new 
commercial fishing harbor. The Hyde Street Harbor 
includes 60 new commercial fishing berths, and harbor 
service facilities, such as a work dock, vessel pump-out 
station, parking and restrooms. The Port has formed a 
Fisherman's Wharf Environmental Quality Group to 
address community concerns regarding the management 
of the harbor. The $4.5 million initial project is fianded 
in part by a $3.5 million loan from California Depart- 
ment of Boating and Waterways. The Port will contrib- 
ute the remaining ftinds. The harbor should be up and 
running in time for the 1998 crab season. 

Downtown Ferry Terminal 

The Downtown Ferry Terminal project focuses 
upon the role of the Ferry Building in enhancing reg- 
ional ferry service to and from downtown San Francisco. 
The overall scope of the project includes the creation of a 
new south terminal for East Bay ferry service, enhance- 
ment of a north terminal for North Bay service, im- 
provements to the Bayside promenade, creation of a 
central passageway through the center of the Ferry 
Building, renovation of existing docking facilities, and a 
new 960-foot breakwater that would provide a protected 
southern basin for future ferry and excursion service 




expansion and a public walkway for sightseeing and 
fishing. Construction of the Terminal is anticipated to 
begin in fall of 1997. The project cost is estimated at 
$16 million. 

Pier 35 Cruise Terminal 

The Cruise Terminal is currently undergoing 
$2 million of improvements. The installation of an 
escalator and an elevator to ease passenger congestion 
during embarkation and debarkation is underway. The 
aesthetics of the building will be improved by sandblast- 
ing the ceiling and interior beams, new lighting, a new 
sign and graphics program, murals and banners and a 
new waiting room/information center. 

Fisherman's 

The intent of the Lighting Master Plan is to 
establish a consistent and romantic lighting approach to 
the Fisherman's Wharf area. Goals include the reduction 
of glare and reestablishmcnt of fixtures that are pan of 
the historic fabric of the Wharf 

A plaza is being constructed on the Fisherman's 
Wharf Triangle Lot at the corner of Jefferson and Powell 
Streets. The plaza will extend 1.^0 feet west of Powell 
Street, accommodating the heavy pedestrian traffic 
common to the Fisherman's Wharf area with benches, 
trees, two J.C. Dccaux public toilets, and loading space 
for horse drawn carriages. Construction is expected 
during 1997 in conjunction with the F-Linc Street Car 
and the change in traffic flow around the Triangle I ot 
from one-way to two-way. 



13 





Ferry Building Plaza 



The Mid-Embarcadero Roadway project includes realignment of the surface 
roadway, construction of the Embarcadero Promenade, and construction of a plaza on 
thb City-side of the Ferry Building. The project extends from Folsom Street in the 
south to Broadway Street at the north. An urban design concept for the Mid- 
Ei^barcadero was prepared under the direction of the Waterfront Transportation 
Projects Office by a consultant team led by ROMA Design Group. The Plaza will be 
a dramatic and impressive civic open space in front of the landmark Ferry Building. 
On October 8, 1996 the Port Commission adopted a resolution approving the 
alignment of the Mid-Embarcadero Roadway. The resolution also authorized Port 

aff to work with the Waterfront Transportation Project Office to develop urban 
design criteria for the project. 



t 



Proposition B 



i In March 1996, San Francisco voters approved Proposition B authorizing the 
Francisco Giants to build a new stadium at Pier 46 in China Basin. The state-of- 
art baseball park will seat 42,000 and is targeted to open in April 2000. 
The new $255 million stadium will be the first privately-financed Major League 
in more than 30 years. Since 1962, 21 new baseball parks have been built for 
ijor League teams, all with substantial financial contributions from public sources. 
The new ballpark will be located in a 13-acre, two-block area bordered by King, 
nd and Third streets, and on the south by China Basin. It will provide breathtak- 
Views of the water, the Bay Bridge and the San Francisco skyline and will be the 
It dramatic location in America to watch Major League Baseball. 



14 



Balance Slieet 



(In Thousands) 

June 30 1996 1995 



Assets 



Current Assets: 

Cash and investments, held in City Treasury - Port operating fund 

Receivables - Net 

IVIaterials and supplies 

Prepaid insurance and other assets 
Total Current Assets 
Restricted Assets: 

Cash-Contract retention deposits 

Cash held in City Treasury: 
Lessee deposits 
Capital outlay 

Cash held by Trustee - Bond interest and redemption 

Investments - Lessee deposits held in trust 
Total Restricted Assets 
Property, Plant, and Equiment - Net 
Other Assets 
Total Assets 



$24,518 
13,819 
998 
226 
39,561 

86 

1,588 
4,208 
9,421 
797 
16,100 
198,720 
687 
$255,068 



$21,331 
16,844 
1,174 
231 
39,580 

748 

1,199 
5,894 
9,105 
896 
17,842 
195,797 
740 
$253,959 



Liabilities and Equity 

Current Liabilities Payable from Current Assets: 

Accounts payable and accrued liabilities 
Current maturities of long-term debt 
Accrued bond interest payable 
Total Current Liabilities 

Current Liabilities Payable from Restricted Assets: 

Current maturities of long-term debt 
Accrued bond interest payable 
Lessee deposits 
Contract retention payable 
Deferred grants 
Total Payable from Restricted Assets: 
Deferred Revenue 

Long-Term Debt - Net of current maturities 
Total Liabilities 

Equity: 

Contributed capital 
Revaluation of property 
Retained Earnings 
Total Equity 

Total Liabilities and Equity 



$15,658 
1,860 
78 
17,596 

2,565 
1,457 
2,385 
86 

12 

6,505 
2,453 
55,904 
82,458 

27,825 
56.063 
88.722 
172,610 
$255,068 



$16,845 
1,870 

95 

18,810 

2,225 
1,501 
2,095 
748 
367 
6,936 
518 
60,215 
86.479 

26.700 
56,063 
84.717 
167,480 
$253,959 



Copies of the Port's full financial statements and independent auditors' report may he obtained for 5J. "iO from ll>r 
Finance Manager, Port of San Francisco, Suite 3 1 00, Ferry Building. San FraiuiHC, ( '.ilifbmia 941 1 1 



15 



Statement of Income 



(In Thousands) 



Years Ended June 30 



1996 



1995 





Operating Revenues: 

Commercial and industrial $20,624 

Parking 3,545 

Cargo 2,003 

Ship repair 1,570 

Fishing 1,002 

Harbor services 648 

Cruise 575 

Other maritime 468 

Power 729 

Other 893 

Total Operating Revenues 32,057 

Operating Expenses: 



Operations and maintenance 21,671 

Depreciation and Amortization 5,074 

Total Operating Expenses 26,745 

Operating Income 5,312 



ther Income (Expense): 



Interest income 1,859 

Interest expense (3,189) 

Earthquake damages and expenses (932) 

Federal and state earthquake assistance 932 

Gain on sale of materials 23 

Other 

Total Other Expense (1.307) 

Net Income $4,005 



$19,571 
3,334 
4,057 
1,634 
741 
595 
571 
462 
699 
548 
32,212 



23,439 
4,783 

28,222 
3,990 



1,731 
(3,261) 
(7,946) 
7,946 
16 
525 
(989) 
$3,001 



^epies of the Port's full financial statements and independent auditors' report may be obtained for $2.50 from the 
^ ; , Finance Manager, Port of San Francisco, Suite 5100, Ferry Building, San Francisco, California 941 11 

16 



a ^vl n.' . 



41 




statement of Income 



to 



1996 



1995 



strial 



$20,624 


$19,571 


3.545 


3.334 


2,003 


4,057 


1,570 


1,634 


1,002 


741 


648 


595 


575 


571 


468 


462 


729 


699 


893 


548 


32,057 


32.212 





Port Adminstrators 

..r jes 

Executive 1 Dennis Boucy 

Dircaor, Administration: Benjamia Kutnick 

r, Facilities and Operations: Cliff Jarrard 

Director, Planning and Development: Sharon Lee Polledri 

■ 7 1 

Director, Tenant and Maritime Services: Lewis Wiseman 
Manager, Governmental Affaire Veronica Sanchez 
anager, Marketing: Carolyn ^^cmilian 

ounsel: Julie Van Nostern 

roduction Notes 

he Port ot :)aM ^rancisco 
^^^-Ttillan 
)ailcy 

Dennis Boucy, Pttcr Dailcy, Carolyn Nfacmillan, 
Dcnise Martinez, Monique Moycr, Kate Nichol, Paul Osmundson, 
Sharon Lee Polledri, Amy Quesada, Gerry Roybal, 
Veronica S 'ill Simpson — 

^ . , --jT>,....i ^ lartha Murray Design, San F»<tne&C6 

Paiva; except page 11, Mark Snydfer^ 5 $3,001 
Historical Photographs: Port of San Francisco Archives 
Printing: NORCAL Printing, San Francisco 



rt/rrr m/r\ hr nbtaitttd fnr $2.50 frv» 
CaJifirmU94ni 



I 





tlnll|WllilM ffl| 
TO 8 



The Port of San Francisco is of the utmost importance to 
the overall economic and cultural well-being of this City - and 
much like the rest of the City, the Port is experiencing something of a renais- 
sance. As Mayor, I am happy to be the beneficiary of several projects just now 
coming to fruition along our Port, and I'm proud to have jump-started and 
initiated several more under my watch. From Bayview/ Hunter's Point to 
Fisherman's Wharf, the Port of San Francisco is bustling with activity that 
will ensure its prominence in the coming century. 

Perhaps the most visible and appealing project of all is the new 
Embarcadero Roadway which includes a Muni rail extension that opened 
just this year, providing local residents and visitors alike with a convenient 
way to get around our waterfront, as well as a crucial link to other parts of 
our City and to various other regional transit systems. Over the course of 
the next few years, passengers on this scenic rail line will be able to watch 
several other projects rising into view along the waterfront - the downtown 
Ferry Terminal expansion, the Ferry Building Restoration, and, of course, 
the new Giants baseball park near China Basin. 

Add to all this excitement the new development at Mission Bay, includ- 
ing a new UCSF Medical Center and a Third Street Muni Light Rail 
Extension that will provide a direct link between Hunter's Point and the 
Ferry Building; and the prospect of ferry shuttle service between the Port 
and a redeveloped Treasure Island; and it should be easy to see why I'm so 
excited about the long- and short-term future of the Port of San Francisco. 

Under the inspired leadership of Director Douglas Wong, a fully com- 
mitted Port Commission and a talented administration staff, I know we're in 
good hands. 

Mayor Willie Lewis Brown, Jr. 




FROM BAYVIEW/HUNTER'S POINT 
TO FISHERMAN'S WHARF THE 
PORT OF SAN FRANCISCO IS 
BUSTLING WITH ACTIVITY THAT 
WILL ENSURE ITS PROMINENCE 
IN THE COMING CENTURY. 



DOCUMENTS DEPT. 

OCT 8 1999 

SAN FRANCISCO 
PUBLIC LIBRARY 




2 



THE SAN FRANCISCO PORT COMMISSION 

Port Commission President Michael Hardeman, a 
native San Franciscan, is a journeyman pictorial artist. Currently Business 
Manager of Sign Display Local Union 510, he serves on all Bay Area Labor 
and Building Trades Councils and is on the Executive Committee of the San 
Francisco Labor Council. He continues his history of work on numerous 
other community and civic boards. 

Commissioner Frankie Lee is President and CEO of SOHA 
Engineers in San Francisco, a structural engineering consulting company that 
specializes in the design and retrofit of buildings and bridges. In addition to 
his background as a professional engineer, Mr. Lee has always been active in 
the banking, finance and real estate communities. He is also active as a board 
member of SPUR and the Asian Neighborhood Design. 

Commissioner Denise McCarthy has held a long-term interest in 
locating and developing economic opportunities for North Beach and 
Chinatown residents. Commissioner McCarthy has been involved in all the 
major citizen planning and development efforts of the Port in the past ten 
years and has taken leadership roles in many of these efforts. 

Commissioner James Herman, former President of the International 
Longshoremen's and Warehousemen's Union (ILWU), settled in San Francisco 
in the early 1950's. Deeply involved in community affairs, he was appointed 
by Mayor Dianne Feinstein to the Port Commission in 1982 where he served 
12 years. He was appointed again in 1996 by Mayor WilHe Brown. 

Commissioner Kimberly BfiANOOAf, the first African American 
woman to serve on the Port Commission, has been with Wells Fargo Bank 
since 1986. An Assistant Vice President and Personal Banking manager at 
Wells Fargo bank, she also serves as treasurer at both Jelani House, Inc. 
and the Audrey L. Smith Development Center. 




THE PORT OF SAN FRANCISCO IS 
GOVERNED BY A FIVE MEMBER 
BOARD OF COMMISSIONERS. 
EACH OF WHOM IS APPOINTED 
BY THE MAYOR AND SUBJECT TO 
CONFIRMATION BY THE CITY'S 
BOARD OF SUPERVISORS. EACH 
MEMBER IS APPOINTED FOR A 
FOUR-YEAR TERM. 




EXECUTIVE DIRECTOR'S REPORT 



The Port of San Francisco encompasses a broad range of 
activities from parkland and open space to shipyards to ferries to cargo and 
cruise shipping to fishing to tourism and recreation. It is without a doubt 
one of the world's most diverse maritime enterprises. 

During the past year we have experienced exciting and dynamic changes 
that are charting a new course for the Port. That course is founded on fiscal 
strength. Net income for the fiscal year 1996/97 is $7.1 million- the largest 
net income posted since fiscal year 1983/84, and the third consecutive year 
of growth. This growth has been fueled largely by commercial leases and 
maritime-related activities. 

Along this course, we are witnessing a re-awakening of the Waterfront. 
The Waterfront Land Use Plan, adopted by the Port Commission in June 
1997, will expand maritime operations and encourage the creation of new 
public access, recreation and open space along the bay. It is an intricate plan 
of balanced uses- encompassing both maritime and non-maritime activities. 
It is a dynamic plan that is yielding results right now 

The Port of San Francisco currently boasts one of the world's most dynam- 
ic maritime portfolios. To better serve our varied maritime customers, I have 
reestablished the Port's Maritime Department, which will not only help our 
current customers "grow" their businesses, but aggressively seek out new 
maritime customers as well. 

We have completed a $1 million improvement program for our Pier 35 
Cruise Terminal which this past season saw 53 vessel calls that carried over 
90,000 passengers to and from San Francisco. And the redevelopment 
of Pier 45 as a modern fish processing center, has reestablished 
Fisherman's Wharf as the center for commercial fishing in 
Northern California. 

And, new land uses, like the Giants Pacific Bell Baseball 
Park, will not only pioneer sweeping changes for the water- 
front, they will also broaden the Port's financial footings. 



The successes we are witness- 
ing are only possible as a result 
of the combined efforts of the 
212 men and women who work 
diligently to keep the Port on 
course. 

The Port of San Francisco is 
truly embarked on a new 
course. A course that will 
enhance its position as one of 
America's most diverse mar- 
itime enterprises. 



DAY TO DAY OPERATIONS AT 
THE PORT ARE GUIDED BY FIVE 
DIRECTORS. PICTURED FROM LEFT: 

BENJAMIN KUTNICK 
DIRECTOR. FINANCE & 
ADMINISTRATION 

PAUL OSMUNDSON 
DIRECTOR. PLANNING & 
DEVELOPMENT 

VIVIAN FEI TSEN 

DIRECTOR. REAL ESTATE & ASSET 
MANAGEMENT 

PETER DAILEY 
MARITIME DIRECTOR 

ALEXANDER LEE 
DIRECTOR. ENGINEERING & 
MAINTENANCE 




Cargo Shipping. Under the responsibility of the 
1 Port's new Maritime Division, a new cargo shipping marketing 
plan which broadens the Port's outreach to the world's cargo 
shipping fleet has been formialated and is in the process of being implemented. 
As compared to 1996, total cargo tonnage moving through Port cargo terminals 
has doubled and cargo shipping revenues grew 40% in 1997. These increases 
are due to the continued growth of our steamship customers: Madrigal Wan 
Hai, Grancolombiana, Chilean Line, Maruba and Columbus Line. 

Cruise Shipping. During the period ending June 30, 1997, 
53 cruise ships visited San Francisco embarking and disembarking over 
90,000 passengers. These ship calls and passengers generated an estimated 
$27.8 million in economic impact to Northern California. 

The Port has developed a ten-point homeport incentive plan that is being 
marketed to major cruise lines to bring more ships to San Francisco. In addi- 
tion the Port is leading a national effort to modify a 111 year-old federal law 
that effectively stunts the number of cruise ships that call on San Francisco. 
And it is one of the leading forces behind the "Cruising America-Create 
Jobs" coalition, a national organization of ports, convention bureaus, tourism 
and maritime businesses dedicated to opening new cruise itineraries 
between U.S. ports, without requiring a stop at a foreign port. 

Ship Repair. San Francisco Drydock Company is the Port's largest 
maritime tenant and one of the West Coast's largest full service ship repair 
companies. During 1996-97 it won a $2 million service and maintenance con- 
tract to work on one of the most luxurious cruise ships in the world, the M.V. 
Crystal Symphony. The job employed hundreds of workers from ten different 
unions. To speed the turnaround time, the job also employed the Port's newly 
modernized cranes- which had undergone a $4 million upgrade in 1997. 

America's Cup. Two America's Cup syndicates aimed at captur- 
ing the 2000 sailing race have based their operations at the Port. "America 
True" sponsored by the San Francisco and Golden Gate Yacht Clubs has 
established a compound at Pier 17. "AmericaOne," sponsored by the St. 
Francis Yacht Club, is expected to set up a compound at Pier 3 in conjunc- 
tion with Hornblower Yachts. 




SHIP REPAIR HAS BEEN A LONG 
TIME COMPONENT OF THE PORT OF 
SAN FRANCISCO. THE PORT IS HOME 
TO SAN FRANCISCO DRYDOCK 
COMPANY. ONE OF THE LARGEST 
FULL-SERVICE REPAIR FACILITIES ON 
THE WEST COAST 



A NATURAL AMPHITHEATER FOR 
SAILING. SAN FRANCISCO S PORT 
IS HOME TO TWO AMERICA'S CUP 
SYNDICATES. AMERICA TRUE AND 
AMERICA ONE. 




A key focus of the Port at Fisherman's Wharf is to revitahze 
the fishing industry, which is the heart of Fisherman's 
Wharf The successful $14 milhon redevelopment of Pier 45 for a modern 
fish processing wholesale space, has reestablished Fisherman's Wharf as the 
center for commercial fishing in Northern California and Oregon. Such 
major players as H&N Fish Company, Caito Fisheries, Inc., and North Coast 
Fisheries, Inc., who were not previously located at Fisherman's Wharf, now 
have facilities there. 

The next major project to support the fishing industry at Fisherman's 
Wharf, is the development of the Hyde Street Harbor, which will provide 60 
new berths for commercial fishing vessels (bringing the total to 170) and 
much needed harbor service facilities. This project will accommodate the 
expanded demands of fishing vessels coming to the harbor and will accom- 
modate newer commercial vessels that are too large for the existing berths. 
Construction is scheduled to commence in early 1999, with completion 
scheduled for late 1999. 

In addition, the Port is making pedestrian improvements in the 
Fisherman's Wharf area, including a recently completed plaza and historic 
F-line streetcar stop at the Powell/Jefferson intersection. 

Another element of the revitalization program is the Lagoon Lighting 
Project, which brings nighttime drama, romance, and a sense of history back 
to the fishing boat lagoons at Fisherman's Wharf This project was com- 
pleted and dedicated by the Mayor of San Francisco in the Fall of 1997. 



10 




A NEW INTERPRETATIVE SIGNAGE 
PROGRAM IS NOW BEING DEVELOPED 
BY THE PORT TO ENHANCE THE VISI- 
TORS' EXPERIENCE TO FISHERMAN'S 
WHARF. THE PROGRAM WILL CREATE 
INTERPRETATIVE EXHIBITS TO EXPLAIN 
THE HISTORY OF THE WHARF AS 
WELL AS THE HISTORY AND CUR- 
RENT WORKINGS OF THE FISHING 
INDUSTRY AT FISHERMAN'S WHARF. 
IT WILL ALSO PROVIDE A CLEAR ORI- 
ENTATION TO PEDESTRIANS AND 
PROVIDE DIRECTION TO SIGNIFICANT 
DESTINATIONS AT FISHERMAN'S 
WHARF THESE INTERPRETATIVE 
SIGNS ARE EXPECTED TO BE 
INSTALLED DURING FALL 1998. 




FINANCIAL REVIEW 



The Port of San Francisco is a self- 
supported enterprise department of 
the City and Coiinty of San Francisco. 
All revenues generated by the Port 
are to be used only for Port purposes. 



The Port receives no operating 
subsidies from the City, and the 
Port has no taxing pov^^er. 

The Port's revenue is derived pri- 
marily from property rentals to com- 
mercial and industrial enterprises 
and maritime operations, which 



include cargo, ship repair, fishing, 
harbor services, cruise and other 
maritime activities. The comparative 
balance sheet as of Jvme 30, 1997 and 
1996 and the income statement for 
the years then ended are presented 
on pages 13 and 14. 




OPERATING REV 


ENUE 


■ Comm'l/lndustrial Rent 


62% 


Parking 


10% 


■ Miscellaneous 


9% 


■ Cargo 


5% 


■ Ship Repair 


3% 


■ Commercial Fishing 


3% 


■ Power 


2% 


■ Harbor Services 


2% 


Cruise 


2% 


□ Other Maritime 


2% 



11 



Net Income 

The fiscal year 1996/97 net income of $7.1 million is the 
highest net income posted at the Port since fiscal year 
1983/84. This is the third consecutive year of increased net income. Assets 
have been efficiently used to provide increased revenue, enabling the Port to 
improve facilities, fund capital improvement projects and support maritime 
operations. The growth in net income is the continuing result of an aggressive 
leasing plan, cost control measures and the benefits of a robust economy. 



(In Thousands) 



Years Ended June 30, 


1997 


1996 


1995 


1994 


1993 


Operating Revenue 


$37,290 


$32,057 


$32,212 


$32,431 


$32,086 


Operating Expenses 


(29.877) 


(26.745) 


(28.222) 


(30.134) 


(31.240) 


Operating Income 


7,413 


5,312 


3,990 


2,297 


846 


Other Expense 


(305) 


(1,307) 


(989) 


(2.746) 


(1.966) 


Net Income (Loss) 


$7,108 


$4,005 


$3,001 


($449) 


($1,120) 



Operating revenues 

Fiscal year 1996/97 operating revenue increased by 16.3% to $37.3 million 
from $32.1 million. Commercial and industrial rent, which increased by 
12.6% to $23.2 million, includes a $844,000 decrease due to the termination 
of an agreement with Catellus. This decrease was offset by a cancellation fee 
from Catellus of $1.25 million, which is recorded in other revenues. Ship 
repair revenue had the only significant decrease (21.2%) due to the closure 
of the SECO shipyard as of June 30, 1996. The total decrease from SECO of 
$528,000 was offset by an increase of $195,000 from other ship repair activity. 

Operating Expenses 

Operating expense for fiscal year 1996/97 increased by 11.7% to $29.9 mil- 
lion from $26.7 million. This is the first increase in expense since 1993. The 
largest increase was in personnel expenses, $922,000, due largely to collec- 
tive bargaining agreements negotiated on a Citywide basis. Other increased 
operating expenses include: property related costs (utilities, security and 
taxes); materials and supplies for maintenance; judgment and claims; terminal 
operating costs; and depreciation. 

Long Term Debt 



Outstanding Average Annual 

Bond Issue Principal Debt Service Final Term 



State G.O. Bonds 


$ 570,000 


$ 296,400 


10/1/98 


1994 Revenue Bonds 


48,820,000 


5,369,616 


7/1/09 


City G.O. Bonds 


8.000.000 


1.210.150 


6/1/05 




$57,390,000 


$6,876,166 





12 




OTHER INCOME (EXPENSE) 

OTHER INCOME (EXPENSE) IS TYPI- 
CALLY COMPRISED OF INTEREST 
INCOME, INTEREST EXPENSE. EARTH- 
QUAKE DAMAGE EXPENSE, FEDERAL/ 
STATE EARTHQUAKE ASSISTANCE AND 
GAIN ON THE SALE OF MATERIALS. 
THERE WERE TWO ADDITIONAL ITEMS 
THAT CONTRIBUTED TO THE INCREASE 
OF $1.0 MILLION. THERE WAS A 
$3.1 MILLION GAIN IN INSURANCE 
PROCEEDS RELATED TO PIER 48 
REFLECTING THE INTERIM PAYMENTS 
RECEIVED ON THE NOVEMBER 1996 
FIRE. IN ADDITION, THERE WAS A 
$2.2 MILLION LOSS FROM THE 
WRITE-OFF OF RAILROAD TRACKS. 
WHICH ARE NO LONGER IN USE. 

LONG-TERM DEBT 

AT JUNE 30, 1997, THE PORT'S OUT- 
STANDING LONG-TERM DEBT OBLIGA- 
TIONS CONSISTED OF STATE OF 
CALIFORNIA GENERAL OBLIGATIONS 
BONDS, SERIES H, PORT REVENUE 
BONDS, SERIES 1994, AND CITY AND 
COUNTY OF SAN FRANCISCO HARBOR 
IMPROVEMENT GENERAL OBLIGATION 
BONDS, SERIES A AND B. 

THE PORT S OUTSTANDING INDEBT- 
EDNESS DECREASED BY $4,425 
MILLION. OR 7%. TO $57,390 MILLION 
IN FISCAL YEAR 1996/97. THE STATE 
GENERAL OBLIGATION BONDS (WHICH 
WILL BE FULLY RETIRED IN OCTOBER 
1998) HAVE A LIEN ON NET REVENUE 
THAT IS SENIOR TO THE REVENUE 
BONDS. 

NET REVENUE PLEDGED TO THE 
REVENUE BONDS IS REQUIRED TO 
BE MAINTAINED AT 1,30 TIMES NET 
REVENUES AVAILABLE FOR REVENUE 
BOND DEBT SERVICE. FISCAL YEAR 
1996/97 BOND DEBT SERVICE COV- 
ERAGE IS 2.68 TIMES COMPARED TO 
2.17 TIMES IN FISCAL YEAR 
1995/96. 




Operating Revenues: 

Commercial and industrial 

Parking 

Cargo 

Ship repair 

Fishing 

Harbor services 
Cruise 

Other maritime 

Power 

Other 



Total Operating Revenues 

Operating Expenses: 

Operations and maintenance 
Depreciation and amortization 

Total Operating Expenses 

Operating Income 

Other Income (Expense): 

Interest and investment income 
Interest expense 

Earthquake damages and expenses 
Federal and state earthquake assistance 
Gain from fire insurance settlement 
Abandonment of railroad tracks 
Gain on sale of materials 

Total Other Income (Expense) (305) (1.307) 

Net Income $7,108 $4,005 



BALANCE SHEET 



(In Thousands) 

June 30, 1997 1996 



Assets 

Current Assets: 

Cash and investments, held in 

City Treasury - Port operating fund 

Receivables - Net 

Materials and supplies 

Prepaid insurance and other assets 

Total Current Assets 

Restricted Assets: 



Cash-Contract retention deposits 269 86 

Cash held in City Treasury: 

Lessee deposits 1,572 1,588 

Capital outlay 2,535 4,208 

Cash held by Trustee - Bond interest and redemption 9,437 9,421 

Investments - Lessee deposits held in trust 826 797 

Total Restricted Assets 14,639 16,100 

Property, Plant, and Equipment - Net 202,081 198,720 

Other Assets 634 687 

Total Assets $259,105 $255,068 



Liabilities and Equity 

Current Liabilities Payable from Current Assets: 

Accounts payable and accrued liabilities 
Current maturities of long-term debt 
Accrued bond interest payable 

Total Current Liabilities 

Current Liabilities Payable from Restricted Assets: 



Current maturities of long-term debt 2,675 2,565 

Accrued bond interest payable 1,400 1,457 

Lessee deposits 2,398 2,385 

Contract retention payable 269 86 

Deferred grants 12 12 

Total Payable from Restricted Assets 6,754 6,505 

Deferred Revenue 3,551 2,453 

Long-Term Debt - Net of current maturities 51.859 55.904 

Total Liabilities 76,370 82,458 

Equity: 

Contributed capital 30,725 27,825 

Revaluation of property 56,063 56,063 

Retained Earnings 95.947 88.722 

Total Equity 182.735 172.610 

Total Liabilities and Equity $259,105 $255,068 




$25,078 $24,518 

15,435 13,819 

974 998 

264 226 

41,751 39,561 



$12,660 $15,658 
1,485 1,860 
61 78 

14,206 17,596 



COPIES OF THE PORT'S FULL FINANCIAL 
STATEMENTS AND INDEPENDENT 
AUDITOR'S REPORT MAY BE 
OBTAINED FOR $2.50 FROM THE: 

ACCOUNTING MANAGER. 
PORT OF SAN FRANCISCO. 
FERRY BUILDING. SUITE 3100 
SAN FRANCISCO. CA 94111. 



14 




One of the most important events in recent Port history hap- 
pened in June 1997 when the Port Commission approved the 
final Waterfront Land Use Plan, which will guide the revitalization of the 
Port over the next 20 years. This approval marked the culmination of more 
than seven years of public planning that included over 100 public meetings. 
During this process planners and urban designers, fishermen, union repre- 
sentatives, mariners, neighborhood leaders, community activists, environmen- 
talists, City staff and elected officials spent countless hours developing a con- 
sensus about the Port's future. 

They agreed that over two-thirds of the Waterfront would be reserved for 
maritime uses - cargo, fishing, ship repair, ferries and excursions, cruise ships 
and recreational boating. The rest could be used for open space and public 
access, retail, restaurants, entertainment and other uses to activate the water- 
fi"ont and bring more people down to the newly bustling Herb Caen Way. 

As the Plan is implemented, San Franciscans will find new places to enjoy 
this great City, places to watch the City's thriving maritime industries, and 
places for new recreation and vital business activities. Places to eat and 
drink, buy produce, work, rent a bike or roller blades, launch a dinghy or 
take refuge on a windy, foggy, day. And places to enjoy the quiet and restful 
beauty of the Bay. As these new places are created the ultimate goal of the 
Waterfront Plan - to reunite the City with its Waterfront - will be achieved. 




The Waterfront Land Use Plan will 
open new recreational opportunities 
for residents and visitors... 



f 



...a wide array of restaurants and 
cafe s, including new and newty 
renovated ones, will cater to the 
most discriminating palates.... 




....Expanded public access to the 
waterfront will be facilitated through 
a network of wa/Mvays. as well as 
bus and rail transit... 




....One of the most photographed 
cities in the world, San Francisco 
and its waterfront are a favonte 
location for ftlm, televtsion and 
commercial productions. 



16 





Waterfront transportation projects. 
San Francisco's Waterfront Transportation Projects include 
roadway improvements, a historic streetcar line, a light rail 
line, pedestrian walkways and enhanced lighting. The South Embarcadero 
was completed in 1994, the North Embarcadero was completed in 1996, 
the E-line light rail was completed in January 1998, and the historic 
Fisherman's Wharf F-line Loop is scheduled for completion in Fall of 1998. 

Ferry Building Renovation Project. One of San Francisco's 
most endearing landmarks, the Ferry Building has stood watch over the 
City's waterfront for nearly 100 years. The Port is making progress towards 
the renovation of this historic building that still serves the entire Bay Area 
with six commuter ferry routes, transporting passengers from Tiburon, 
Sausalito, Larkspur, Alameda, Vallejo and Oakland. The Ferry Building's 
civic importance has led to a development program that is befitting a national 
historic landmark. The project is scheduled to begin in 1999. 

Downtown ferry terminal project. The scope of this project 
includes the creation of a new south terminal for East Bay ferry service, 
enhancement of a north terminal for North Bay service, addition of new 
promenades on the Bay, restoration of a passageway through the center 
of the Ferry Building, renovation of existing docking facilities, and a new 
^ breakwater that provides a protected southern basin for future ferry 
excursion service expansion. The project is scheduled to begin construction 
in 1998. 

Fisherman's Wharf. Part of the history and magic of Fisherman's 
Wharf was restored recently when the Port of San Francisco completed the 
first phase of the Lighting Revitalization Project at the Fishing Boat 
Lagoons on the Wharf Underway since 1996, the lighting project creates a 
consistent, integrated lighting program for Fisherman's Wharf A plaza is 
being constructed on the Fisherman's Wharf Triangle Lot at the corner of 
Jefferson and Powell Streets. The plaza will extend west of Powell Street, 
accommodating the heavy pedestrian traffic common to the Fisherman's 
Wharf area with benches, trees and public toilets. Construction is currently 
underway and is expected to be completed by Fall 1998. 

18 



THE MID-EMBARCADERO 
ROADWAY PROJECT, INCLUDES 
REALIGNMENT OF THE SURFACE 
ROADWAY, CONSTRUCTION OF 
THE EMBARCADERO 
PROMENADE. AND CONSTRUC- 
TION OF A PLAZA ON THE CITY- 
SIDE OF THE FERRY BUILDING. 
THE PROJECT. WHICH EXTENDS 
FROM FOLSOM STREET IN THE 
SOUTH TO BROADWAY STREET AT 
THE NORTH, IS SCHEDULED FOR 
COMPLETION IN THE YEAR 2000. 




PORT COMMISSION: 

Michael Hardeman, President 
Denise McCarthy, Vice President 
Kimberly Brandon 
Frankie G. Lee 
James R. Herman 

EXECUTIVE STAFF: 

Douglas F. Wong, 

Executive Director 

Peter A. Dailey, 

Maritime Director 

Benjamin A. Kutnick, 

Director, Finance & Administration 

Alexander K. Lee, 

Director, Engineering & Maintenance 
Paul Osmundson, 
Director, Planning & Development 
Vivian Fei Tsen, 

Director, Real Estate & Asset Management 

Noreen Ambrose, 

General Counsel 

Veronica Sanchez, 

Manager, Government Affairs 

Kathy Mallegni, 

Manager, Human Resources 

Roberta L. Jones, 

Manager, Environmental & Safety 
Charles Mitchell, 
Chief Wharfinger 
Renee D. Dunn, 
Public Relations Officer 



PRODUCTION NOTES 



Published by the 
Port of San Francisco 
Editor. 

Renee D. Dunn 
Contributors: 

Dan Hodapp 

Diane Oshima 

Anne Cook 

Alec Bash 

Cynthia Pon 

John Woo 

Jeffrey Bauer 

G. L. Roybal 

Jill Simpson 
Design/ Product ion: 

Denis Ko Production Art, 

San Francisco 

Claude Jacques, Art Director 
Denis Ko, Designer 
Richard Musson, Writer 

Photograpliy: 
Terry Heffernan, San Francisco 
Nick Pavloff, Oakland 
Robert Cameron, San Francisco 
Tom Paiva, Los Angeles 
Philip Harvey, San Francisco 
Dennis De Silva, San Francisco 

Printing: 
Somerset Printing, Burlingame 



Port of San Francisco • The Ferry Building 
San Francisco, California, USA 94111 
415/274-0400 • Fax: 415/274-0528 



www.sfport.com